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

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FORM 10-K

|ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934    
|-----------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2002                                              
|or                                                                                       
|oTRANSITION 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

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

|Delaware(State of Incorporation)                                         |  | 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 (Section 229.405 of this chapter) 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.  o

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 26, 2003, 1,015,010 shares of Class A Common Stock, $.001 par value and 15,000
shares of Class B 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 26, 2003, each of the additional registrants had the number of shares outstanding which
is shown on the table below. As of March 26, 2003, 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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PART I

Item 1.Business

General

Building Materials Corporation of America or BMCA is a leading national manufacturer 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. 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.

Residential Roofing

We are a leading manufacturer of a complete line of premium residential roofing products. Residential roofing product sales represented approximately 67%, 73% and
74% of our net sales in 2000, 2001 and 2002, respectively. 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 that we are the largest manufacturer of laminated
residential roofing shingles and the second largest manufacturer of strip 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.

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The Timberline®Series.

The
Timberline® series offers a premium laminated product line that adds dramatic shadow lines and substantially improves the appearance of a roof. The series includes:



The Sovereign®Series.

The
Sovereign® series includes:



Specialty Shingles.

Our specialty asphalt shingles include:



Weather Stopper® Roofing System.In addition to shingles, we supply the major components necessary to install a
complete roofing system. Our Weather Stopper® Roofing System begins with Weather Watch® and Stormguard® waterproof underlayments for eaves, valleys and flashings to
prevent water seepage between the roof deck and the shingles caused by ice build-up and wind-driven rain. Our Weather Stopper® Roofing System also includes
Shingle-Mate® glass reinforced or 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 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. 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 ENERGYSTAR®rated systems. Commercial roofing represented approximately 26%, 22%
and 21% of our

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net sales in 2000, 2001 and 2002, respectively. We believe 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 theGAFGLAS®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; ourTOPCOAT®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.

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 7%, 5% and 5% of our net sales in 2000, 2001 and 2002, respectively. These products primarily
consist of residential attic ventilation systems and metal and fiberglass air distribution products for the HVAC industry.

Marketing and Sales

Our sales and marketing functions are designed to help customers grow their businesses and avoid hassles while offering facility owners the best and safest
choice. We have one of the industry's largest sales forces. A staff of technical professionals who work directly with architects, consultants, contractors and building owners provides 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 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 takes our products and services (including enhanced warranty protection) directly to the property owner and architects.

No
single customer accounted for more than 10% of our net sales in 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

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several of these suppliers and others are available as substitutes. In 2002, prices of most raw materials other than asphalt and energy have been relatively stable, rising moderately with general
industrial prices, while the increase in the price of asphalt was driven mostly by the rise in crude oil prices during 2002.

We
believe that the recent disruption of asphalt production caused by the petroleum industry strike in Venezuela may lead to asphalt shortages for the U.S. roofing industry in 2003. With
the strength of our manufacturing operations which allows us to use many types of asphalt, we have been able to secure alternative sources of supply of asphalt and, as a result, believe the asphalt
market conditions will not have a significant impact on future sales, although no assurances can be provided in that regard.

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, other than motors, 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. The motors used in the manufacture of our specialty building products and accessories are available from both domestic
and foreign suppliers. In 2002, substantially all of the motors used in our ventilation products were purchased from a foreign supplier. All of these raw materials, including motors, 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. We purchase
substantially all of our requirements for colored roofing granules from an affiliate, International Specialty Products Inc., under a 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".

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 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 and guarantees of varying duration covering most of our commercial roofing products and limited warranties
covering most of our specialty building products and accessories for periods generally ranging from 5 to 10 years, with lifetime limited warranties on certain products. From time to time, we
review the reserves established for estimated probable future warranty claims.

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

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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.

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
Certainteed, Solar Group Inc., Southwark, Inc., Lomanco Inc. and Standex Air Distribution Products.

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 at Wayne, New Jersey, Chester, South Carolina and
Walpole, Massachusetts. Our research and development expenditures were approximately $5.9, $5.9 and $6.6 million in 2000, 2001 and 2002, respectively.

Patents and Trademarks

We own or license approximately 120 domestic and 125 foreign patents or patent applications. In addition, we own or license approximately 225 domestic and 60
foreign trademark registrations or applications. While we believe the patent protection covering certain of our products to be material to those products, we do not believe that any single patent,
patent application or trademark is material to our business or operations. We believe that the duration of the existing patents and patent licenses is consistent with our business needs.

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. 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, $1.3 and $0.7 million in 2000, 2001 and 2002, respectively, relating to
environmental compliance. These expenditures are included in additions to property, plant and equipment. We anticipate that aggregate capital expenditures relating to environmental compliance in 2003
and 2004 will be approximately $3.4 and $2.0 million, respectively.

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. We believe that our manufacturing facilities comply in all material respects
with applicable laws and regulations. Although we cannot predict whether more burdensome requirements will be adopted by governmental authorities in the future, we believe that any potential liability
for compliance with the laws and regulations will not materially affect our business, liquidity or financial position.

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

Employees

At December 31, 2002, we employed approximately 3,400 people worldwide, approximately 1,200 of which were subject to 13 union contracts. The contracts are
effective for four year periods. During 2002, four labor contracts expired and were renegotiated. We believe that our relations with our employees and their unions are satisfactory.

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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       |                 | Facility
|-------------- | --------------- | --------
|Alabama        |                 |         
|               | Mobile          |         
|California     |                 |         
|               | Fontana         |         
|               | Hollister       |         
|               | Shafter         |         
|               | Stockton        |         
|Florida        |                 |         
|               | Tampa           |         
|Georgia        |                 |         
|               | Atlanta         |         
|               | Savannah        |         
|Indiana        |                 |         
|               | Mount Vernon    |         
|               | Michigan City   |         
|Illinois       |                 |         
|               | Romeoville      |         
|Maryland       |                 |         
|               | Baltimore       |         
|Massachusetts  |                 |         
|               | Millis          |         
|               | Walpole         |         
|Minnesota      |                 |         
|               | Minneapolis     |         
|Mississippi    |                 |         
|               | Purvis          |         
|New Jersey     |                 |         
|               | North Branch    |         
|               | North Brunswick |         
|               | Swedesboro      |         
|               | Wayne           |         
|North Carolina |                 |         
|               | Burgaw          |         
|               | Goldsboro       |         
|Ohio           |                 |         
|               | Wadsworth       |         
|Pennsylvania   |                 |         
|               | Erie            |         
|               | Wind Gap        |         
|South Carolina |                 |         
|               | Chester         |         
|Tennessee      |                 |         
|               | Nashville       |         
|Texas          |                 |         
|               | Dallas          |         
|               | Port Arthur     |         

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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 2002, we made capital expenditures
of $34.6 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 have 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. This 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 Holding 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, 2002).
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 and BMCA filed a defendant class 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. This action is in a preliminary 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. 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 BMCA with G-I Holdings or an order directing G-I Holdings to cause BMCA to file for bankruptcy protection. BMCA 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 and the creditors' committee has appealed such ruling to the United States District
Court.

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". 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

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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 2002. BMCA has not assumed any liabilities with respect to Building Claims, and believes it will not sustain any liability in connection with such
claims.

Insurance Matters.In January and May 2000, G-I Holdings filed summary actions in Superior Court of New
Jersey, Middlesex County against several of its insurers, which had indicated that the Center for Claims Resolution or the CCR, a non-profit organization set up to administer and handle
asbestos-related personal injury claims against the participating companies and in which G-I Holdings was a member, had claimed a right to G-I Holdings' insurance proceeds to
satisfy what the CCR contends are G-I Holdings' share of settlements entered by the CCR while G-I Holdings was a member. On March 17, 2000 and July 28, 2000, the
trial court granted summary judgment in favor of G-I Holdings, and the CCR's motions for a stay pending appeal were denied by both the trial court and the appellate division. All insurers
in both actions have now paid the amounts in dispute to G-I Holdings. The CCR's appeal of the court's grant of summary judgment was denied by the Appellate Division in 2002.

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".

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, 2002, its liability in respect of the environmental liabilities of
G-I Holdings not assumed by us was approximately $11.4 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, 2002, in respect of assumed and other environmental liabilities
is $1.2 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

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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".

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 substantially full defense and indemnity under our insurance policies for most Environmental Claims, although our
insurers have not affirmed a legal obligation under the policies to provide indemnity for those claims. We also believe that recoveries could be well in excess of the estimated recoveries for all
Environmental Claims, although there can be no assurances in this regard.

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.

*
* *

9

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We
believe that the ultimate disposition of the cases described above under "Environmental Litigation", "Asbestos-in-Building Claims" and "Other Litigation" 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

PART II

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

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

In
2001 and 2002, we did not declare or pay dividends to BHC. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 12 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-13 and pages F-36 to F-39, 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-14.

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-13.

Item 8.Financial Statements and Supplementary Data

See Index on page F-1 and Financial Statements and Supplementary Data on pages F-17 to F-56.

10

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

On June 20, 2002, we dismissed Arthur Andersen LLP as our independent public accountants and appointed KPMG LLP as our new independent public accountants.
The decision to dismiss Arthur Andersen and to retain KPMG was recommended and approved by our Board of Directors.

Arthur
Andersen's reports on our consolidated financial statements for each of the fiscal years ended December 31, 2001 and 2000, did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During
the fiscal years ended December 31, 2001 and 2000 and the subsequent interim period through June 20, 2002, there were no disagreements between us and Arthur Andersen
on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure, which disagreements, if not resolved to Arthur Andersen's satisfaction, would have
caused them to make reference to the subject matter of the disagreement in connection with their report.

None
of the reportable events described in Item 304(a)(1)(v) of Regulation S-K occurred during the fiscal years ended December 31, 2001 and 2000 or
during the subsequent interim period through June 20, 2002.

We
provided Arthur Andersen with a copy of the foregoing disclosures. A copy of Arthur Andersen's letter, dated June 21, 2002, stating that they found no basis for disagreement
with such statements was attached as an exhibit to our current report on Form 8-K filed with the Securities and Exchange Commission on June 24, 2002.

During
the two fiscal years ended December 31, 2001 and 2000 and the subsequent interim period through June 20, 2002, we did not consult with KPMG regarding any of the
matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

PART III

Item 10.Directors and Executive Officers of the Registrant

The following table sets forth the name, age, position and other information with respect to the directors and executive officers of BMCA. Under BMCA's
By-laws, each director and executive officer continues in office until the company's next annual meeting of stockholders and until his or her successor is elected and qualified. As used in
this section, "ISP" refers to International Specialty Products Inc.

|Name and Position Held                                             |  | Age |  | Present Principal Occupation
or Employment and Five-Year Employment History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------------------------------------------------ |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|William W. Collins
Director, Chief Executive
Officer and President |  | 52  |  | Mr. Collins has been President and Chief Executive Officer of BMCA and some of its subsidiaries since September 2000 and a director of these companies since July 1999. 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. Mr. Collins also was Senior Vice PresidentMarketing and Sales, Residential
Roofing Products of BMCA and some of its subsidiaries from November 1997 to July 1999. Since July 1999, 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.

11

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|Name and Position Held                                                                                     |  | Age |  | Present Principal Occupation
or Employment and Five-Year Employment History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------------------- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|David A. Harrison
Director, Senior Vice PresidentMarketing, Contractor Services and Corporate Development |  | 46  |  | Mr. Harrison has been a director of BMCA and some of its subsidiariessince September 2000. He also has been Senior Vice PresidentMarketing, Contractor Services and Corporate Development of BMCA and some of its subsidiaries since July
2000. He is also President of GAF Materials Corporation (Canada) since July 2000. Mr. Harrison was Vice PresidentCorporate Marketing and Development of BMCA and some of its subsidiaries from November 1999 to July 2000, Vice
PresidentMarketing Development of BMCA and some of its subsidiaries from January 1997 to July 1999. From July 1999 to November 1999, Mr. Harrison was Senior Vice President, Corporate Marketing of Centex Corporation, a company in the
construction and related financial services industries.
|Robert B. Tafaro
Director, Senior Vice President and General ManagerResidential Systems                   |  | 52  |  | Mr. Tafaro has been a director of BMCA and some of its subsidiaries since September 2000. He also has been Senior Vice President and General Manager of BMCA and some of its subsidiaries since July 2000. He was Vice PresidentMarketing and Sales,
Commercial Roofing Products of BMCA and some of its subsidiaries from November 1997 to July 2000.                                                                                                                                                                                                                                                                                                                                                                                                                       
|Kenneth E. Walton
Director, Senior Vice PresidentOperations                                               |  | 46  |  | Mr. Walton has been a director of BMCA and some of its subsidiaries since September 2000. He also has been Senior Vice Presidentof BMCA and some of its subsidiaries since July 2000. He was Vice PresidentResidential Operations of BMCA from
March 1999 to July 2000, and Vice PresidentManufacturing of U.S. Intec, Inc., a former subsidiary of BMCA, from December 1997 to March 1999.                                                                                                                                                                                                                                                                                                                                                                                
|John F. Rebele
Director, Senior Vice President and Chief Financial Officer                                 |  | 48  |  | 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 its 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 its subsidiaries from March 1998 to January 2001.                                                                                                                                                                                                                                                                                                                           
|Douglas W. Blackwell
Senior Vice PresidentSupply Chain Management                                         |  | 56  |  | Mr. Blackwell has been Senior Vice President Supply Chain Management and Senior Vice President of BMCA and some of its subsidiaries since February 2001. Mr. Blackwell was previously Vice President of Sourcing and Procurement at Strategic Distribution
Inc., a provider of on-site maintenance, repair and operating supplies from November 1997 to February 2001.                                                                                                                                                                                                                                                                                                                                                                                                        

12

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|Richard A. Weinberg
Executive Vice President, General Counsel and Secretary |  | 43 |  | Mr. Weinberg has been Executive Vice President, General Counsel and Secretary of BMCA and its subsidiaries since May 1998 and was Senior Vice President, General Counsel and Secretary of BMCA and its subsidiaries from May 1996 to May 1998. 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. Prior to that time, he held the positions of Senior Vice President, General
Counsel and Secretary of these companies from May 1996 to May 1998. Mr. Weinberg has served as a director of G-I Holdings since May 1996. He also has been Executive Vice President, General Counsel and Secretary of ISP and its subsidiaries since May
1998 and was Senior Vice President, General Counsel and Secretary of ISP and its subsidiaries from May 1996 to May 1998.
|--------------------------------------------------------------------------- |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Susan B. Yoss
Senior Vice President                                         |  | 44 |  | 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 and was Vice President and Treasurer of the same companies from
February 1998 to July 1999. Since July 1999, 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, was Senior Vice President and Treasurer of ISP and some of its
subsidiaries from July 1999 to September 2000, and was Vice President and Treasurer of ISP from February 1998 to July 1999.                                                                                                                                                                                                                                                          

13

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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 the Chief Executive
Officer and the four other most highly compensated executive officers of BMCA as of December 31, 2002. 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.

|                     |                                    |      |      | Annual Compensation (7) |         | Long-Term
Compensation |   |         |        
|-------------------- | ---------------------------------- | ---- | ---- | ----------------------- | ------- | ---------------------- | - | ------- | -------
|
|William W. Collins   |                                    | 2002 |      | $                       | 355,417 |                        | $ | 650,000 |        
|                     | Chief Executive Officer            |      | 2001 |                         |         | 284,583                |   |         | 400,000
|                     | and President                      |      | 2000 |                         |         | 245,625                |   |         | 150,000
|Robert B. Tafaro     |                                    | 2002 |      | $                       | 264,556 |                        | $ | 200,000 |        
|                     | Senior Vice President and          |      | 2001 |                         |         | 231,751                |   |         | 200,090
|                     | General Manager                   |      | 2000 |                         |         | 200,999                |   |         | 44,071 
|                     | Residential Systems                |      |      |                         |         |                        |   |         |        
|David A. Harrison    |                                    | 2002 |      | $                       | 247,372 |                        | $ | 149,734 |        
|                     | Senior Vice President              |      | 2001 |                         |         | 233,500                |   |         | 147,445
|                     | Marketing, Contractor              |      | 2000 |                         |         | 207,375                |   |         | 39,995 
|                     | Services and Corporate Development |      |      |                         |         |                        |   |         |        
|Douglas W. Blackwell |                                    | 2002 |      | $                       | 225,417 |                        | $ | 146,449 |        
|                     | Senior Vice President             |      | 2001 |                         |         | 181,923                |   |         | 114,153
|                     | Supply Chain Management            |      | 2000 |                         |         |                       |   |         |       
|John F. Rebele       |                                    | 2002 |      | $                       | 216,250 |                        | $ | 158,634 |        
|                     | Senior Vice President and          |      | 2001 |                         |         | 185,625                |   |         | 114,002
|                     | Chief Financial Officer            |      | 2000 |                         |         | 155,625                |   |         | 27,684 

---

14

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15

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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 2002 under our 2001
Long-Term Incentive Plan.

Long-Term Incentive PlanAwards in 2002

|                     |  |      |  |       |  | Performance or Other period Until Maturation Or Payout(1) |  | Estimated Future Payouts Under
Non-Stock Price-Based Plans
|-------------------- |  | ---- |  | ----- |  | --------------------------------------------------------- |  | ----------------------------------------------------------
|
|
|
|William W. Collins   |  | 7/02 |  | 3,000 |  |                                                          |  | 323.30                                                    
|Robert B. Tafaro     |  | 1/02 |  | 1,000 |  |                                                          |  | 297.90                                                    
|                     |  | 7/02 |  | 1,100 |  |                                                          |  | 323.30                                                    
|David A. Harrison    |  | 7/02 |  | 1,100 |  |                                                          |  | 323.30                                                    
|Douglas W. Blackwell |  | 1/02 |  | 1,000 |  |                                                          |  | 297.90                                                    
|                     |  | 7/02 |  | 1,400 |  |                                                          |  | 323.30                                                    
|John F. Rebele       |  | 7/02 |  | 1,100 |  |                                                          |  | 323.30                                                    

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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, Harrison, Blackwell, Rebele 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 and provide for a single-sum payment consisting of two to three times salary and bonus and related benefits if

16

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employment is terminated within a thirty-six month period following the change in control event. In 2003, irrevocable letters of credit were issued in support of the employment security
agreements.

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
entitites 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.

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. 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 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

As of March 26, 2003, 100% of our outstanding shares of Class A common stock and Class B common stock were owned of record by BMCA Holdings
Corporation.

The
following table sets forth information with respect to the ownership of BMCA's common stock, as of March 26, 2003, by each other person known to us to own beneficially more
than 5% of either class 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                                                    |  | 1,015,010                                 | (2) | 100.0            | % | 98.5               | %
|                     |  | All directors and executive officers of BMCA as a group (8 persons) |  |                                          |     |                 |   |                   |  
|Class B Common Stock |  | Samuel J. Heyman                                                    |  | 15,000                                    | (2) | 100.0            | % | 1.5                | %
|                     |  | All directors and executive officers of BMCA as a group (8 persons) |  |                                          |     |                 |   |                   |  

---

(2)  The
number of shares shown as being beneficially owned (as defined in Rule 13d-3 of the Exchange Act) by Mr. Heyman attributes ownership of the shares of
BMCA common stock owned by BMCA Holdings Corporation, an indirect wholly-owned subsidiary of G Holdings, to Mr. Heyman. As of March 26, 2003, Mr. Heyman beneficially owned (as
defined in Rule 13d-3 of the Exchange Act) approximately 99% of the capital stock of G Holdings.

17

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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, telecommunications, information and facilities services to us, including the use of our headquarters in Wayne, New
Jersey. We were charged approximately $6.1 million in 2002 for these services under the management agreement, inclusive of the 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
management agreement is expected to be amended to adjust the management fees payable under the agreement and to extend the term of the agreement effective January 1, 2003 through
December 31, 2003. 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 2002 was
approximately $0.8 million. 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. Based on
the services provided in 2002 under the management agreement, the aggregate amount payable by us to ISP under the management agreement for 2003, inclusive of the services provided to G-I
Holdings, is expected to be approximately $6.3 million. 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 requirements under a requirements contract from ISP, except for the requirements of certain of our
roofing plants that are supplied by third parties. We are continuing to operate under the terms of the existing agreement, pending negotiation and execution of a new requirements contract with ISP. In
2002, we purchased in the aggregate approximately $73.2 million of mineral products from ISP.

Tax Sharing Agreement

We entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994, 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

18

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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, under any circumstances, 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 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

BMCA makes loans to, and borrows from, G-I Holdings and its subsidiaries from time to time at prevailing market rates. As of December 31, 2002,
a $2.6 million loan, including cumulative interest of $0.2 million, was owed to BMCA by BMCA Holdings Corporation at interest rates ranging between 4.75% and 4.25%. In addition, no loans
were owed by us to affiliates. We also make non-interest bearing advances to affiliates, of which no balance was outstanding at December 31, 2002. During 2002, we made a
distribution of $1.9 million to our parent corporations. See Note 16 to Consolidated Financial Statements.

Item 14.Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for the design, maintenance and effectiveness of disclosure controls and procedures (as
defined in the Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934).

We
have formed a Disclosure Controls Committee to review and revise as required, our disclosure controls and procedures. Such controls and procedures include quarterly meetings of
executives and controllers throughout BMCA to ensure that information required to be disclosed by us in the periodic reports we file or submit under the Exchange Act is accurate and to allow timely
decisions to be made regarding such disclosure. The effectiveness of the disclosure controls and procedures have been evaluated by the Chief Executive Officer and Chief Financial Officer within
90 days of the filing date of this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are
adequate and effective.

There
have been no significant changes in internal controls or in other factors that could significantly affect these internal controls subsequent to the date of the evaluation in
connection with the preparation of this Annual Report on Form 10-K.

19

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PART IV

Item 15.Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

(a)(1)
Financial Statements: See Index on page F-1.

(a)(2)
Financial Statement Schedules: See Index on page F-1.

(a)(3)
Exhibits:

|Exhibit Number |  | Descriptions                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 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 July 5, 2000, between 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 4.13 to BMCA's Form 10-K for the year ended December 31, 2000 (the "2000 10-K")).                                                                                              
|4.2            |  | First Supplemental Indenture, dated as of December 4, 2000, to the Indenture dated as of July 5, 2000, between 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 4.14 to the 2000 10-K).
|4.3            |  | Registration Rights Agreement, dated July 5, 2000, between BMCA and BNY Capital Markets Inc. (incorporated by reference to Exhibit 4.15 to the 2000 10-K).                                                                                                                                                                                                                                                                   
|4.4            |  | First Amendment to the Registration Rights Agreement, dated as of December 4, 2000, to Registration Rights Agreement dated July 5, 2000, among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment
Corporation, as guarantors, and BNY Capital Markets, Inc., as initial purchaser (incorporated by reference to Exhibit 4.16 to the 2000 10-K).                                 
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                              

20

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|4.5  |  | Indenture, dated as of December 9, 1996, 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. 333-20859)).                                                                                                                                                                                                           
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  |  | First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of December 9, 1996 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 10.7 of the 2008 Notes S-4).                                                                             
|4.7  |  | Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 9, 1996 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 4.5 to the 2000 10-K).
|4.8  |  | 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)).                                                                                                                                                                                                           
|4.9  |  | 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, Building Materials Investment Corporation, as guarantor,
 and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.8 of the 2008 Notes S-4).                                                                 
|4.10 |  | 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 the 2000 10-K).          
|4.11 |  | 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)).                                                                                                                                                                                                              
|4.12 |  | 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 of the 2008 Notes S-4).                                                                                
|4.13 |  | 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).    
|4.14 |  | 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).                                                                                                                                                                                                                                                               
|4.15 |  | 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).                                                                                
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                            

21

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|4.16  |  | 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).                                                      
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 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 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 year ended December 31, 2001 (the "2001 10-K")).                                          
|10.6  |  | Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.9 to BMCA's Form 10-K for the year ended December 31, 1996).*                                                                                                                                                                                                                                                                            
|10.7  |  | Form of Amendment to Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.12 to BMCA's Form 10-K for the year ended December 31, 1997 (the "1997
10-K")).*                                                                                                                                                                                                                                            
|10.8  |  | Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.13 to the 1997 10-K).*                                                                                                                                                                                                                                                                                                                   
|10.9  |  | BMCA Preferred Stock Option Plan (incorporated by reference to Exhibit 4.2 to BMCA's Registration Statement on Form S-8 (Registration No. 333-60589)).*                                                                                                                                                                                                                                                                                                                           
|10.10 |  | BMCA 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.8 to the 2000 10-K).*                                                                                                                                                                                                                                                                                                                                                                                 
|10.11 |  | 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).                                                                                                                                                                                                                                                                                        
|10.12 |  | 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).                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

22

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|10.13 |  | 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).                                                                                                                                                                                                      
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14 |  | Consolidated Credit Agreement, dated as of December 30, 2002, by and among BMCA, the lenders party thereto, and The Bank of New York, as agent for the lenders and as Swing Line Lender (the "Consolidated Credit Agreement").                                                                                                                                                                                                    
|10.15 |  | Security Agreement, dated December 22, 2000, by and among BMCA and each of the grantors party thereto and The Bank of New York as Collateral Agent (incorporated to reference to Exhibit 10.18 to the 2000 10-K).                                                                                                                                                                                                                 
|10.16 |  | Collateral Agent Agreement, dated December 22, 2000, by and among BMCA, such Subsidiary of BMCA a party thereto, the 1999 Administrative Agent (as defined therein), each Senior Note Trustee (as defined therein), the 2000 Administrative Agent (as
defined therein), the Chase Manhattan Bank, Fleet National Bank and the Bank of New York, as Collateral Agent (incorporated by reference to Exhibit 10.19 to the 2000 10-K).
|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 |  | Employment Security Agreement between BMCA and Douglas W. Blackwell, effective June 2001.*                                                                                                                                                                                                                                                                                                                                        
|16    |  | Letter dated June 21, 2002, from Arthur Andersen LLP to the Securities and Exchange Commission regarding the change in certifying accountant (incorporated by reference to Exhibit 16 to BMCA's current report on Form 8-K filed
June 24, 2002).                                                                                                                                                                                  
|21    |  | Subsidiaries of BMCA.                                                                                                                                                                                                                                                                                                                                                                                                             
|99.1  |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                           
|99.2  |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                           

---



23

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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 26, 2003 |  | By:                                         
|                     |  |                                             

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

|Signature                               |  | Title                                                                                     |  | Date          
|--------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | --------------
|                                        |  |                                                                                           |  |               
|/s/WILLIAM W. COLLINSWilliam W. Collins |  | Chief Executive Officer, President and Director (Principal Executive Officer)             |  | March 26, 2003
|/s/JOHN F. REBELEJohn F. Rebele         |  | Senior Vice President, Chief Financial Officer and Director (Principal Financial Officer) |  | March 26, 2003
|/s/DAVID A. HARRISONDavid A. Harrison   |  | Director                                                                                  |  | March 26, 2003
|/s/ROBERT B. TAFARORobert B. Tafaro     |  | Director                                                                                  |  | March 26, 2003
|/s/KENNETH E. WALTONKenneth E. Walton   |  | Director                                                                                  |  | March 26, 2003
|/s/JAMES T. ESPOSITOJames T. Esposito   |  | Vice President and Controller (Principal Accounting Officer)                              |  | March 26, 2003

24

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SIGNATURES

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

|                     |  | BUILDING MATERIALS INVESTMENT CORPORATION
|-------------------- |  | -----------------------------------------
|Date: March 26, 2003 |  | By:                                      
|                     |  |                                          

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

|Signature                               |  | Title                                                                                                    |  | Date          
|--------------------------------------- |  | -------------------------------------------------------------------------------------------------------- |  | --------------
|                                        |  |                                                                                                          |  |               
|/s/WILLIAM W. COLLINSWilliam W. Collins |  | Chief Executive Officer, President and Director (Principal Executive Officer)                            |  | March 26, 2003
|/s/BARRY A. CROZIERBarry A. Crozier     |  | Director                                                                                                 |  | March 26, 2003
|/s/JOHN F. REBELEJohn F. Rebele         |  | Senior Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |  | March 26, 2003

25

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CERTIFICATION

I,
William W. Collins, certify that:





Date:
March 26, 2003

|       |  | /s/WILLIAM W. COLLINS                 |  | 
|------ |  | ------------------------------------- |  | 
|       |  |                                      
|Name:  |  | William W. Collins                    |  | 
|Title: |  | Chief Executive Officer and President |  | 

26

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CERTIFICATION

I,
John F. Rebele, certify that:





Date:
March 26, 2003

|       |  | /s/JOHN F. REBELE                                 |  | 
|------ |  | ------------------------------------------------- |  | 
|       |  |                                                  
|Name:  |  | John F. Rebele                                    |  | 
|Title: |  | Senior Vice President and Chief Financial Officer |  | 

27

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BUILDING MATERIALS CORPORATION OF AMERICA
FORM 10-K

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

|                                                                                                      |                                               | Page
|----------------------------------------------------------------------------------------------------- | --------------------------------------------- | ----
|Management's Discussion and Analysis of Financial Condition and Results of Operations                 |                                               | F-2 
|Selected Financial Data                                                                               |                                               | F-14
|Independent Auditors' Report                                                                          |                                               | F-15
|Information Regarding Report of Predecessor Independent Public Accountants                            |                                               | F-16
|Consolidated Statements of Operations for the three years ended December 31, 2002                     |                                               | F-17
|Consolidated Balance Sheets as of December 31, 2001 and 2002                                          |                                               | F-18
|Consolidated Statements of Cash Flows for the three years ended December 31, 2002                     |                                               | F-19
|Consolidated Statements of Stockholders' Equity (Deficit) for the three years ended
December 31, 2002 |                                               | F-21
|Notes to Consolidated Financial Statements                                                            |                                               | F-22
|Supplementary Data (Unaudited):                                                                       |                                               |     
|                                                                                                      | Quarterly Financial Data (Unaudited)          |     
|SCHEDULES                                                                                            
|Consolidated Financial Statement Schedule:                                                            |                                               |     
|                                                                                                      | Schedule IIValuation and Qualifying Accounts |     

F-1

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BUILDING MATERIALS CORPORATION OF AMERICA

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

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., an indirect parent of BMCA. G-I Holdings Inc. is a
wholly-owned subsidiary of G Holdings Inc. See Note 1 to 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.

Critical Accounting Policies

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America 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, 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 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 17 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.

Revenue Recognition

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

Customer Incentives

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

F-2

---

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 these
incentives and volume rebate programs and, if adjustments to our estimates are required, additional allowances or reductions may be recorded.

Allowance for Doubtful Accounts

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. If the financial condition of our customers were to deteriorate, resulting in their inability to
make payments, additional allowances may be required.

Inventories

Inventories are valued at the lower of cost or market. The LIFO (last-in, first-out) method is utilized to determine cost for asphalt raw
materials used to produce our products. All other inventories are valued on the FIFO (first-in, first-out) method. We write down 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 about future demand and market conditions. If actual market
conditions differ than those projected by management, additional inventory adjustments may be required.

Long-Lived Asset Impairment

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 for 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 fair value. Fair
value is determined based on estimated future cash flows. See Note 3 to Consolidated Financial Statements.

Goodwill

Through December 31, 2001, we amortized goodwill on a straight-line basis over the expected useful lives of the underlying assets. 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 being amortized over its estimated useful life. However, goodwill will be 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, net sales multiples and multiples of earnings before interest, taxes, depreciation and amortization or EBITDA. Our analysis was completed for each of the reporting units
to which the goodwill relates. If the estimated range of values from the methodologies employed are less than the carrying amount of the related reporting unit, impairment losses for goodwill will be
charged to results of operations. In determining the estimated future discounted cash flows, we considered projected future levels of income,

F-3

---

future business trends, and market and economic conditions. Our analysis related to multiples of sales and EBITDA are based on related industry data. We adopted SFAS No. 142 effective
January 1, 2002 and updated our analysis at December 31, 2002 and noted no impairment existed. See Note 4 to Consolidated Financial Statements.

Product Warranty Claims

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 and guarantees of varying duration covering most of our commercial roofing products and limited
warranties covering most of our specialty building products and accessories 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.

Environmental Liability

We accrue environmental costs when it is probable that we have incurred a liability and the expected amount can be reasonably estimated. 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 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.

Pension and Other Postemployment Benefits

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. Projected health care benefits additionally reflect our assumptions
about health care cost trends. The cost of providing 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

2002 Compared with 2001

We recorded net income in 2002 of $32.6 million compared with net income of $18.8 million for 2001, representing an increase of over 73%. The
reported net income of $32.6 million includes a $1.8 million ($1.1 million after-tax) pre-tax loss on the sale of our Monroe, Georgia manufacturing
facility. See Note 6

F-4

---

to Consolidated Financial Statements. Excluding the loss on the sale of the Monroe, Georgia manufacturing facility net income would have been $33.7 million in 2002. The increase in 2002 net
earnings was primarily the result of higher operating income, lower manufacturing costs and lower interest expense.

Net
sales for 2002 were $1,360.7 million compared with $1,293.0 million in the same period of 2001, representing an increase of 5.2%. Higher net sales in 2002 were
primarily attributable to an increase in both net sales of premium residential roofing products and commercial roofing products. The increase in net sales of premium residential roofing products in
2002 resulted from higher average selling prices and higher unit volumes, while the increase in net sales of commercial roofing products resulted from higher unit volumes partially offset by lower
average selling prices.

Operating
income for 2002 was $114.9 million compared with $97.0 million for 2001, representing an increase of $17.9 million or 18.5%. Excluding the loss on the sale
of the Monroe, Georgia manufacturing facility, operating income would have been $116.7 million in 2002. Higher operating results in 2002 were primarily attributable to an increase in both net
sales of premium residential and commercial roofing products along with lower manufacturing costs, partially offset by the loss on sale of the Monroe, Georgia manufacturing facility and higher
selling, general and administrative expenses. As a result of the adoption of SFAS No. 142, goodwill amortization, which amounted to $2.0 million before tax in 2001, is no longer being
amortized in 2002.

Interest
expense decreased from $60.8 million in 2001 to $55.0 million in 2002, primarily due to lower average borrowings and a lower average interest rate. Other expense,
net was $9.0 million for 2002 compared to $6.4 million in 2001 with the increase primarily due to increases in the cost of the Accounts Receivable Securitization Agreement. See
Note 9 to Consolidated Financial Statements.

2001 Compared with 2000

We recorded net income in 2001 of $18.8 million compared with a net loss of $11.2 million in 2000. Excluding the impact in 2000 of the
pre-tax gain of $17.5 million ($11.0 million after-tax) from the sale of the security products business of our subsidiary, LL Building Products Inc., a
pre-tax charge of $15.0 million ($9.5 million after-tax) related to an increase in product warranty reserves (see Note 2 to Consolidated Financial Statements),
pre-tax losses from the sale of investment securities of $18.1 million ($11.4 million after-tax) and an after-tax extraordinary loss of
$0.3 million, the net loss would have been $1.0 million in 2000. Results for 2000 also included operating income of the security products business of LL Building Products Inc.,
which was sold in September 2000, of $3.7 million pre-tax ($2.3 million after-tax). The increase in 2001 net earnings was primarily the result of higher
operating income and lower other expenses, partially offset by higher interest expense.

Net
sales for 2001 were $1,293.0 million compared with $1,207.8 million in the same period of 2000 representing an increase of 7.1%. Excluding the impact of the sale of the
security products business of LL Building Products Inc., net sales were higher by 9.1% in 2001. Higher net sales in 2001 were primarily attributable to an increase in net sales of premium
residential roofing products, partially offset by lower net sales in commercial roofing products and the sale of the security products business of LL Building Products Inc. The increase in net
sales of premium residential roofing products in 2001 resulted from higher unit volumes and higher average selling prices, while the decline in net sales of commercial roofing products resulted from
lower unit volumes and lower average selling prices.

Operating
income for 2001 was $97.0 million compared with $63.9 million in 2000, representing an increase of $33.1 million or 51.8%. Excluding the
$3.7 million of operating income of the security products business of LL Building Products Inc., together with the $17.5 million gain on sale of these assets and the
$15.0 million product warranty reserve charge in 2000, operating income would have been higher by $39.3 million or 68.1% in 2001. Higher operating results in 2001 were primarily
attributable to an increase

F-5

---

in premium residential roofing products net sales along with lower manufacturing costs, partially offset by higher selling, general and administrative expenses, a decrease in net sales of commercial
roofing products, and the sale of the security products business of LL Building Products Inc. The higher selling, general and administrative expenses in 2001 were principally due to higher
volume related transportation and warehouse expenses.

We
recorded in 2000 a $17.5 million pre-tax gain from the sale of certain assets of the security products business of LL Building Products Inc. (see
Note 6 to Consolidated Financial Statements), a pre-tax charge of $15.0 million related to an increase in product warranty reserves (see Note 2 to Consolidated
Financial Statements), pre-tax losses from the sale of investment securities of $18.1 million, and an after-tax extraordinary loss of $0.3 million related to the
write-off of unamortized deferred financing fees in connection with the extinguishment of debt.

Interest
expense increased from $53.5 million in 2000 to $60.8 million in 2001 primarily due to lower capitalized interest and higher average borrowings, partially offset
by lower interest rates. The lower capitalized interest in 2001 is the result of the completion of construction of three new manufacturing facilities in the second half of 2000. Other expense, net was
$6.4 million for 2001 compared to $27.6 million in 2000, with the decrease primarily attributable to the pre-tax loss of $18.1 million from the sale of investment
securities occurring in 2000 and lower other expenses in 2001.

Liquidity and Financial Condition

Net cash inflow during 2002 was $67.2 million before financing activities, including $101.8 million of cash generated from operations and the
reinvestment of $34.6 million for capital programs.

Cash
invested in additional working capital totaled $0.9 million during 2002, primarily reflecting increases in accounts receivable and inventory of $6.3 and $17.3 million,
respectively, partially offset by increases in accounts payable and accrued liabilities of $15.0 and $7.4 million, respectively. Cash provided by operating activities also reflected net
proceeds of $5.7 million from the sale of accounts receivable to a third party in connection with our Accounts Receivable Securitization Agreement (see Note 9 to Consolidated Financial
Statements), a $2.5 million increase from related parties/parent corporations transactions, and a $4.4 million decrease in the reserve for product warranty claims.

Net
cash used in financing activities totaled $17.5 million in 2002, including $15.2 million of repayments of long-term debt, $1.9 million of
distributions to parent corporations, a $0.1 million loan to our parent corporation, and $0.2 million in financing fees and expenses. See Note 16 to Consolidated Financial
Statements. Our 101/2% Senior Notes due 2003, our 73/4% Senior Notes due 2005, our 85/8% Senior Notes due 2006, our 8% Senior Notes due 2007 and our 8%
Senior Notes due 2008 are collectively referred to as the "Senior Notes".

As
a result of the foregoing factors, cash and cash equivalents increased by $49.8 million during 2002 to $96.2 million.

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. We refer to the
consolidated and restated agreement as the Credit Agreement. The Credit Agreement matures in August 2003. As of December 31, 2002, there were no outstanding borrowings and
$39.3 million of letters of credit were outstanding against the Credit Agreement. Our obligations under the Credit Agreement, as well as our obligations under our $7.0 million precious
metal note due 2003, which we refer to as the Precious Metal Note, and approximately $3.4 million of obligations under a standby letter of credit, collectively referred to as the Other
Indebtedness, aggregated $7.0 million of borrowings

F-6

---

and $42.7 million of letters of credit outstanding at December 31, 2002. All those obligations are secured by a first-priority lien on substantially all of our assets and the assets of
our subsidiaries on a pro-rata basis. We refer to these assets below as the "Collateral." The Credit Agreement has been guaranteed by all of our current and future direct and indirect
domestic subsidiaries, other than BMCA Receivables Corporation. Our Senior Notes are secured by a second-priority lien on these assets 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 Credit Agreement. In connection with these transactions, we entered into a security agreement which
grants a security interest in the Collateral in favor of the collateral agent on behalf of the lenders under the Credit Agreement, the Other Indebtedness and the holders of our outstanding Senior
Notes. We also entered into a collateral agent agreement which provides, among other things, for the sharing of proceeds with respect to any foreclosure or other remedy in respect of the Collateral.
We are also required to pay unused commitment fees associated with the Credit Agreement. For 2001 and 2002 these fees amounted to $0.5 and $0.8 million, respectively.

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



In
connection with entering into the additional $100 million secured revolving credit facility in December 2000, we also issued a $7.0 million note (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 also provides that in the event we become the subject of any bankruptcy proceedings, the lenders will, subject to bankruptcy court approval, refinance and
consolidate in full the indebtedness under the Credit Agreement and the Other Indebtedness with a new debtor-in-possession facility. The terms and conditions of that
debtor-in-possession facility would be substantially identical to the Credit Agreement and the Other Indebtedness, and would be in an aggregate amount equal to the then
committed amount under the Credit Agreement plus the principal amount of the Other Indebtedness. That facility would mature on August 18, 2004 and would be secured by a first-priority security
interest in all of the Collateral.

F-7

---



We
have four industrial revenue bond issues outstanding, which bear interest at floating rates. Interest rates on the foregoing obligations ranged between 0.95% and 2.65% as of
December 31, 2002.

We
are currently negotiating the definitive terms of a new credit facility to replace and refinance our existing Credit Agreement, which matures in August 2003. We anticipate this
refinancing will be completed prior to the end of the second quarter of 2003, although there are no assurances in this regard.

See
Note 12 to Consolidated Financial Statements for further information regarding our debt instruments.

At
December 31, 2002, we had total outstanding consolidated indebtedness of $591.1 million, of which $45.3 million matures prior to December 31, 2003, and a
stockholders' deficit of $31.1 million. We anticipate funding these obligations principally from our cash on hand, cash flow from operations and/or borrowings.

In
December 2001, we entered into a new accounts receivable securitization agreement under which we sell certain of our trade accounts receivable to a special purpose subsidiary
of ours, BMCA Receivables Corporation, without recourse, which in turn sells them to a third party, without recourse. The agreement provides 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 expires in December 2004 and is subject to financial and other covenants, including a
material adverse change in business conditions, financial or otherwise. This agreement replaced a prior accounts receivable facility, which expired December 2001. See Note 9 to
Consolidated Financial Statements.

We
make loans to, and borrow from, G-I Holdings and its subsidiaries from time to time at prevailing market rates. As of December 31, 2002, BMCA Holdings Corporation
owed us $2.6 million, including interest for 2002 of $0.1 million, representing a loan for payments made during 2001, at an interest rate of 4.25%. At December 31, 2002, no loans
were owed by us to affiliates. In addition, from time to time we make non-interest bearing advances to affiliates, of which no amounts were outstanding at December 31, 2002. See
Note 16 to Consolidated Financial Statements.

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, 8, 12, 16 and 17 to Consolidated Financial Statements.

We
use capital resources to maintain existing facilities, expand our operations and make acquisitions. In 2003, we expect to spend approximately $60 million on maintenance and
compliance and expansion capital. We expect to generate funding for our capital programs from results of operations and borrowings under our Credit Agreement.

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

F-8

---

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 impact on the results of operations. See Note 6 to the Consolidated Financial Statements. As market growth and customer demand improves, we may reinstate production at one or more of
the remaining two closed manufacturing facilities in the future. The effect of closing these facilities was not material to our results of operations.

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.

We
believe that the recent disruption of asphalt production caused by the petroleum industry strike in Venezuela may lead to asphalt shortages for the U.S. roofing industry in 2003. With
the strength of our manufacturing operations which allows us to use many types of asphalt, we have been able to secure alternative sources of supply of asphalt and, as a result, believe the asphalt
market conditions will not have a significant impact on future sales, although no assurances can be provided in that regard. The
increased tightness in supply of asphalt is already resulting in significant asphalt cost increases from suppliers.

Contractual Obligations and Commercial Commitments

We have contracts with two 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 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 and 2005, respectively. Monthly pricing is fixed and includes capital improvements made at each asphalt terminal by its owner. See the unconditional
purchase obligations on the schedule below as it relates to our asphalt tank suppliers.

The
future cost of these non-cancelable contracts is included in the table of contractual obligations shown below, together with other contractual obligations related to debt
and leases.

|                                   |       | Payments Due by Period
|---------------------------------- | ----- | ----------------------
|
|
|Long-term Debt                     |       | $                     
|Unconditional Purchase Obligations |       |                       
|Operating Leases                   |       |                       
|Capital Lease Obligations          |       |                       
|                                   |       |                       
|                                   | Total |                       
|                                   |       |                       

We
have contractual guarantees and commitments as follows:

|                  |       | Expiration per period
|----------------- | ----- | ---------------------
|
|
|Letters of Credit |       | $                    
|                  |       |                      
|                  | Total |                      
|                  |       |                      

F-9

---

Letters
of credit of $42.7 million, of which $42.0 million are standby letters of credit and $0.7 million are documentary letters of credit, are irrevocable
obligations of an issuing bank. These letters of credit have been guaranteed by us.

Other Obligations

We have other obligations as follows:

2002

2003Other Obligations

Actual
Spending

Projected
Spending(Millions)Environmental Matters

$
0.7

$
3.4Pension and Other Benefits


1.0


0.3Total

$
1.7

$
3.7


Our
expenditures for environmental compliance capital projects were $1.3 and $0.7 million in 2001 and 2002, respectively. We anticipate that environmental regulations will
continue to be imposed on the roofing industry. Although we cannot predict with certainty future environmental expenditures, especially expenditures beyond 2003, 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 2002, we made pension
contributions of $0.7 million compared to $1.4 million in 2001. In 2003, based on current actuarial data, we do not expect to make any pension contribution. Actual contributions in 2003
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 $0.3 million and
$0.5 million in 2002 and 2001, respectively. We expect spending to continue at comparable levels in 2003.

Available Sources of Liquidity

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

$
170.7

$
170.7

$


$


$
Asset Securitization Program


115.0





115.0





Total

$
285.7

$
170.7

$
115.0

$


$



We
have a $210 million Credit Agreement, of which $39.3 million of letters of credit were utilized at December 31, 2002.

Sale of Accounts Receivable

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

F-10

---

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 under which we sell certain of our trade accounts receivable to BMCA Receivables Corporation,
without recourse, which in turn sells them to a third party, without recourse. The agreement provides 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 expires in December 2004 and is subject to financial and other covenants including a material adverse change in business
conditions, financial or otherwise.

As
of December 31, 2001 and 2002, we had $99.7 and $105.4 million, respectively, outstanding under the agreement. The excess of accounts receivable sold over the net
proceeds received is included in "Accounts receivable, other". BMCA Receivables Corporation is not a guarantor under our debt obligations. See Notes 12 and 18 to Consolidated Financial Statements. The
effective cost to us varies with LIBOR and is included in "Other income (expense), net" and amounted to $6.9, $4.0 and $5.2 million in 2000, 2001 and 2002, respectively.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board, which we refer to as FASB, issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets", which we refer to as SFAS No. 142. With the adoption of SFAS No. 142, effective as of January 1, 2002, goodwill is no longer subject to
amortization over its estimated useful life. However, goodwill will be subject to at least an annual assessment for impairment and more frequently if circumstances indicate a possible impairment. We
adopted SFAS No. 142 effective as of January 1, 2002 and updated our evaluation at December 31, 2002 (see Note 4 to Consolidated Financial Statements) and noted no
impairment existed.

In
August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations", which we refer to as SFAS No. 143. SFAS No. 143 establishes
accounting and reporting standards for legal
obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and the normal operation of a long-lived asset. SFAS
No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. Upon initial recognition of such liability, an entity
must capitalize the asset retirement cost by increasing the carrying amount of the related long-lived asset and subsequently depreciating the asset retirement cost over the useful life of
the related asset. If the obligation is settled for other than the carrying amount of the liability, we would then recognize a gain or loss on settlement. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. We early adopted the provisions of SFAS No. 143 and completed our analysis of SFAS No. 143 at December 31, 2002 and noted no material
asset retirement obligations are required.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which we refer to as SFAS No. 144. SFAS
No. 144 was effective as of January 1, 2002 and addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. For long-lived assets to be held and used, an impairment exists when the carrying amount of the asset exceeds its fair value. A long-lived asset is tested for
recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. For 2002, no asset impairment charge was required.

SFAS
No. 144 also established accounting and reporting standards for long-lived assets to be disposed of by sale and broadened the provisions of Accounting Principles
Board Opinion No. 30, which we refer to as APB No. 30, for accounting for discontinued operations to include a component of an entity rather than a segment of a business. A component of
an entity comprises operations and cash flows that can be clearly

F-11

---

distinguished from the rest of the entity. While we have no current plans to do so, if we decide in the future to dispose of a component of our company that meets the criteria of SFAS No. 144,
that component would be reported as a discontinued operation.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections",
which we refer to as SFAS No. 145. SFAS No. 145 eliminates the requirement of SFAS No. 4 that gains and losses on the early extinguishments of debt be recorded as an
extraordinary item unless such gains and losses meet the criteria of APB No. 30 for classification as extraordinary. The rescission of SFAS No. 4 is effective for fiscal years beginning
after May 15, 2002. We expect to adopt SFAS No. 145 effective January 1, 2003.

In
July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which we refer to as SFAS No. 146. SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and supercedes Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS No. 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, and concludes that an entity's commitment to an exit plan does not by itself create a
present obligation that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective of initial measurement of the liability. SFAS No. 146 is
effective for exit or disposal activities that are initiated
after December 31, 2002. As we have no plans at this time for any exit or disposal activities, we believe SFAS No. 146 will not have any immediate effect on our financial statements.

In
November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", which we refer to as 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. A subsidiary's guarantee of the debt of its parent is not subject to the initial recognition and measurement provisions of FIN 45 but are
subject to its disclosure requirements. We have adopted the disclosure requirements of FIN 45 and will apply the recognition and measurement provisions for all guarantees entered into or modified
after December 31, 2002.

In
January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities", which we refer to as FIN 46. In accordance with FIN 46, a variable interest entity
will be consolidated if either the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other
parties, or as a group, the holders of the equity investment at risk lack any one of the following three characteristics of a controlling financial interest: (1) the direct or indirect ability
to make decisions about an entity's activities; (2) the obligation to absorb the expected losses of the entity if they occur; (3) the right to receive the expected residual returns of
the entity if they occur. All companies with variable interests in variable interest entities created after January 31, 2003 shall apply the provisions of FIN 46 immediately. A public entity
with a variable interest in a variable interest entity created before February 1, 2003 shall apply the provisions of FIN 46 to that entity no later than the beginning of the first interim or
annual reporting period beginning after June 15,

F-12

---

2003. We do not expect the provisions of FIN 46 to have a material effect on our financial condition or results of operations.

Market-Sensitive Instruments and Risk Management

During 2000 and in prior years, our investment strategy was to seek returns in excess of money market rates on our available cash while minimizing market risks.
We invested primarily in international and domestic arbitrage and securities of companies involved in acquisition or reorganization transactions, including at times, common stock short positions which
were offset against long positions in securities which were expected, under certain circumstances, to be exchanged or converted into the short positions. With respect to our equity positions, we were
exposed to the risk of market loss. See Note 2 to
Consolidated Financial Statements. We are no longer permitted to engage in those activities under the terms of the Credit Agreement.

Under
the terms of the Credit Agreement, we are only permitted to enter into 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.

*
* *

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-13

---

BUILDING MATERIALS CORPORATION OF AMERICA

SELECTED FINANCIAL DATA

The following table presents our selected consolidated financial data. The results for the year ended December 31, 1998 include the results of the LL
Building Products Inc. business from the date of its acquisition (June 1, 1998), including net sales of $53.3 million. 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,
|--------------- | ---------------------------------------------------------- | -----------------------
|
|
|Operating Data: |                                                            |                        
|                | Net sales                                                  |                        
|                | Operating income                                           |                        
|                | Interest expense                                           |                        
|                | Income (loss) before income taxes and extraordinary losses |                        
|                | Income (loss) before extraordinary losses                  |                        
|                | Net income (loss)                                          |                        

---

|                    |                                        | December 31, |  
|------------------- | -------------------------------------- | ------------ | -
|
|
|Balance Sheet Data: |                                        |              |  
|                    | Total working capital                  |              | $
|                    | Total assets                           |              |  
|                    | Long-term debt less current maturities |              |  
|                    | Total stockholders' equity (deficit)   |              |  

|            |                                       | Year Ended December 31,
|----------- | ------------------------------------- | -----------------------
|
|
|Other Data: |                                       |                        
|            | Depreciation                          |                        
|            | Goodwill amortization                 |                        
|            | Software amortization                 |                        
|            | Capital expenditures and acquisitions |                        

F-14

---

BUILDING MATERIALS CORPORATION OF AMERICA
INDEPENDENT AUDITORS' REPORT

To
the Board of Directors of Building Materials Corporation of America:

We
have audited the accompanying consolidated balance sheet of Building Materials Corporation of America and subsidiaries as of December 31, 2002, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the year then ended, as listed in the accompanying index. In connection with our audit of the 2002 consolidated financial
statements, we also have audited the 2002 consolidated financial statement schedule as listed in the accompanying index. These consolidated financial statements and 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 audit.
The 2001 and 2000 consolidated financial statements of Building Materials Corporation of America and subsidiaries as listed in the accompanying index were audited by other auditors who have ceased
operations. Those auditors expressed an unqualified opinion on those consolidated financial statements, before the revision described in Note 4 to the consolidated financial statements, in
their report dated February 15, 2002.

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

In
our opinion, the 2002 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Building Materials
Corporation of America and subsidiaries as of December 31, 2002, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of
America. Also in our opinion, the related 2002 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.

As
discussed in Note 4 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142,Goodwill
and Other Intangible Assets, as of January 1, 2002.

As
discussed above, the 2001 and 2000 consolidated financial statements of Building Materials Corporation of America and subsidiaries as listed in the accompanying index were audited by
other auditors who have ceased operations. As described in Note 4, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of
Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. In
our opinion, the transitional disclosures for 2001 and 2000 in Note 4 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 and 2000 consolidated
financial statements of Building Materials Corporation of America and subsidiaries other than with respect to such transitional disclosures and, accordingly, we do not express an opinion or any other
form of assurance on the 2001 and 2000 consolidated financial statements taken as a whole.

|                                          |  | KPMG LLP
|----------------------------------------- |  | --------
|Short Hills, New Jersey
February 11, 2003 |  |         

F-15

---

BUILDING MATERIALS CORPORATION OF AMERICA
REPORT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS

INFORMATION REGARDING PREDECESSOR
INDEPENDENT PUBLIC ACCOUNTANTS' REPORT

THE
FOLLOWING REPORT IS A COPY OF A PREVIOUSLY ISSUED REPORT BY ARTHUR ANDERSEN LLP ("ANDERSEN"). THE REPORT HAS NOT BEEN REISSUED BY ANDERSEN NOR HAS ANDERSEN CONSENTED TO ITS INCLUSION IN THIS
ANNUAL REPORT ON FORM 10-K. THE 2000 AND 2001 FINANCIAL STATEMENTS HAVE BEEN REVISED TO INCLUDE TRANSITIONAL DISCLOSURES TO REFLECT THE EFFECTS OF THE COMPANY'S ADOPTION OF STATEMENT OF
FINANCIAL ACCOUNTING STANDARD NO. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. THE ANDERSEN REPORT REFERS TO THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000 AND THE CONSOLIDATED STATEMENTS
OF OPERATIONS, STOCKHOLDERS' EQUITY (DEFICIT) AND CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 WHICH ARE NO LONGER INCLUDED IN THE ACCOMPANYING FINANCIAL STATEMENTS. THE ANDERSEN REPORT REFERS TO
PAGE NUMBERS APPEARING IN OUR 2001 FORM 10-K.

To
Building Materials Corporation of America:

We
have audited the accompanying consolidated balance sheets of Building Materials Corporation of America (a Delaware corporation and wholly-owned subsidiary of BMCA Holdings
Corporation) and subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years
in the period ended December 31, 2001. These financial statements and the schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

In
our opinion, the financial statements referred to above, appearing on pages F-9 to F-41 of this Form 10-K, present fairly, in all material
respects, the financial position of Building Materials Corporation of America and subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Our
audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule appearing on page S-1 of this
Form 10-K is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

|                                       |  | Arthur Andersen LLP
|-------------------------------------- |  | -------------------
|Roseland, New Jersey
February 15, 2002 |  |                    

F-16

---

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                           |                                     | Year Ended December 31,  |          
|---------------------------------------------------------- | ----------------------------------- | ------------------------ | ---------
|
|
|Net sales                                                  |                                     | $                        | 1,207,759
|                                                           |                                     |                          |          
|Costs and expenses:                                        |                                     |                          |          
|                                                           | Cost of products sold               |                          |          
|                                                           | Selling, general and administrative |                          |          
|                                                           | Goodwill amortization               |                          |          
|                                                           | Gain on sale of assets              |                          |          
|                                                           | Warranty reserve adjustment         |                          |          
|                                                           |                                     |                          |          
|                                                           |                                     | Total costs and expenses |          
|                                                           |                                     |                          |          
|Operating income                                           |                                     |                          | 63,922   
|Interest expense                                           |                                     |                          | (53,468  
|Other income (expense), net                                |                                     |                          | (27,640  
|                                                           |                                     |                          |          
|Income (loss) before income taxes and extraordinary losses |                                     |                          | (17,186  
|Income tax (provision) benefit                             |                                     |                          | 6,359    
|                                                           |                                     |                          |          
|Income (loss) before extraordinary losses                  |                                     |                          | (10,827  
|Extraordinary losses, net of income tax benefits of $194   |                                     |                          | (330     
|                                                           |                                     |                          |          
|Net income (loss)                                          |                                     | $                        | (11,157  
|                                                           |                                     |                          |          

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

F-17

---

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                 |                                                                                                                                   | December 31,                         |        
|-------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------
|
|
|Assets                                                                                                                           |                                                                                                                                  
|Current Assets:                                                                                                                  |                                                                                                                                   |                                      |        
|                                                                                                                                 | Cash and cash equivalents                                                                                                         |                                      | $      
|                                                                                                                                 | Accounts receivable, trade, less allowance of $1,058 and $1,484, in 2001 and 2002, respectively                                   |                                      |        
|                                                                                                                                 | Accounts receivable, other                                                                                                        |                                      |        
|                                                                                                                                 | Inventories                                                                                                                       |                                      |        
|                                                                                                                                 | Other current assets                                                                                                              |                                      |        
|                                                                                                                                 |                                                                                                                                   |                                      |        
|                                                                                                                                 |                                                                                                                                   | Total Current Assets                 |        
|Property, plant and equipment, net                                                                                               |                                                                                                                                   |                                      | 352,067
|Excess of cost over net assets of businesses acquired, net of accumulated amortization of $16,370 in 2001 and 2002, respectively |                                                                                                                                   |                                      | 63,294 
|Deferred income tax benefits                                                                                                     |                                                                                                                                   |                                      | 32,924 
|Tax receivable from parent corporations                                                                                          |                                                                                                                                   |                                      | 9,000  
|Other noncurrent assets                                                                                                          |                                                                                                                                   |                                      | 33,259 
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Total Assets                                                                                                                     |                                                                                                                                   | $                                    | 706,325
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Liabilities and Stockholders' Equity (Deficit)                                                                                   |                                                                                                                                  
|Current Liabilities:                                                                                                             |                                                                                                                                   |                                      |        
|                                                                                                                                 | Current maturities of long-term debt                                                                                              |                                      | $      
|                                                                                                                                 | Accounts payable                                                                                                                  |                                      |        
|                                                                                                                                 | Payable to related parties                                                                                                        |                                      |        
|                                                                                                                                 | Accrued liabilities                                                                                                               |                                      |        
|                                                                                                                                 | Reserve for product warranty claims                                                                                               |                                      |        
|                                                                                                                                 |                                                                                                                                   |                                      |        
|                                                                                                                                 |                                                                                                                                   | Total Current Liabilities            |        
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Long-term debt less current maturities                                                                                           |                                                                                                                                   |                                      | 599,896
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Reserve for product warranty claims                                                                                              |                                                                                                                                   |                                      | 22,741 
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Other liabilities                                                                                                                |                                                                                                                                   |                                      | 14,178 
|                                                                                                                                 |                                                                                                                                   |                                      |        
|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; 15,000 shares issued and outstanding                  |                                      |        
|                                                                                                                                 | Loan receivable from parent corporation                                                                                           |                                      |        
|                                                                                                                                 | Accumulated deficit                                                                                                               |                                      |        
|                                                                                                                                 |                                                                                                                                   |                                      |        
|                                                                                                                                 |                                                                                                                                   | Total Stockholders' Equity (Deficit) |        
|                                                                                                                                 |                                                                                                                                   |                                      |        
|Total Liabilities and Stockholders' Equity (Deficit)                                                                             |                                                                                                                                   | $                                    | 706,325
|                                                                                                                                 |                                                                                                                                   |                                      |        

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

F-18

---

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                    |                                                                                                    | Year Ended December 31, |                                
|--------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------- | -------------------------------
|
|
|Cash and cash equivalents, beginning of year        |                                                                                                    | $                       | 55,952                         
|                                                    |                                                                                                    |                         |                                
|Cash provided by (used in) operating activities:    |                                                                                                    |                         |                                
|                                                    | Net income (loss)                                                                                  |                         |                                
|                                                    | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                         |                                
|                                                    |                                                                                                    |                         | Extraordinary losses           
|                                                    |                                                                                                    |                         | Gain on sale of assets         
|                                                    |                                                                                                    |                         | Depreciation                   
|                                                    |                                                                                                    |                         | Goodwill and other amortization
|                                                    |                                                                                                    |                         | Deferred income taxes          
|                                                    |                                                                                                    |                         | Noncash interest charges, net  
|                                                    | Increase in working capital items                                                                  |                         |                                
|                                                    | Increase (decrease) in reserve for product warranty claims                                         |                         |                                
|                                                    | Purchases of trading securities                                                                    |                         |                                
|                                                    | Proceeds from sales of trading securities                                                          |                         |                                
|                                                    | Proceeds from sale of accounts receivable                                                          |                         |                                
|                                                    | (Increase) decrease in other assets                                                                |                         |                                
|                                                    | 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 |                                                                                                    |                         | (17,142                        
|                                                    |                                                                                                    |                         |                                
|Cash provided by (used in) investing activities:    |                                                                                                    |                         |                                
|                                                    | Capital expenditures                                                                               |                         |                                
|                                                    | Proceeds from sale of assets                                                                       |                         |                                
|                                                    | Purchases of available-for-sale securities                                                         |                         |                                
|                                                    | Proceeds from sales of available-for-sale securities                                               |                         |                                
|                                                    | Proceeds from sales of other short-term investments                                                |                         |                                
|                                                    |                                                                                                    |                         |                                
|Net cash provided by (used in) investing activities |                                                                                                    |                         | 29,151                         
|                                                    |                                                                                                    |                         |                                
|Cash provided by (used in) financing activities:    |                                                                                                    |                         |                                
|                                                    | Proceeds from issuance of long-term debt                                                           |                         |                                
|                                                    | Increase (decrease) in borrowings under revolving credit facilities                                |                         |                                
|                                                    | Repayments of long-term debt                                                                       |                         |                                
|                                                    | Distributions to parent corporations                                                               |                         |                                
|                                                    | Loan to parent corporation                                                                         |                         |                                
|                                                    | Repurchase of common stock                                                                         |                         |                                
|                                                    | Financing fees and expenses                                                                        |                         |                                
|                                                    |                                                                                                    |                         |                                
|Net cash provided by (used in) financing activities |                                                                                                    |                         | 14,786                         
|                                                    |                                                                                                    |                         |                                
|Net change in cash and cash equivalents             |                                                                                                    |                         | 26,795                         
|                                                    |                                                                                                    |                         |                                
|Cash and cash equivalents, end of year              |                                                                                                    | $                       | 82,747                         
|                                                    |                                                                                                    |                         |                                

F-19

---

|Supplemental Cash Flow Information:                                |                                                                           |  |   |         |   |   |         |   |   |        
|------------------------------------------------------------------ | ------------------------------------------------------------------------- |  | - | ------- | - | - | ------- | - | - | -------
|Effect on cash from (increase) decrease in working capital items*: |                                                                           |  |   |         |   |   |         |   |   |        
|                                                                   | Accounts receivable                                                       |  | $ | 13,140  |   | $ | (26,611 | ) | $ | (6,285 
|                                                                   | Inventories                                                               |  |   | 3,292   |   |   | (543    | ) |   | (17,287
|                                                                   | Other current assets                                                      |  |   | (653    | ) |   | 35      |   |   | 347    
|                                                                   | Accounts payable                                                          |  |   | (26,814 | ) |   | 715     |   |   | 14,985 
|                                                                   | Accrued liabilities                                                       |  |   | (8,756  | ) |   | 660     |   |   | 7,369  
|                                                                   |                                                                           |  |   |         |   |   |        
|                                                                   | Net effect on cash from increase in working capital items                 |  | $ | (19,791 | ) | $ | (25,744 | ) | $ | (871   
|                                                                   |                                                                           |  |   |         |   |   |        
|Cash paid during the period for:                                   |                                                                           |  |   |         |   |   |         |   |   |        
|                                                                   | Interest (net of amount capitalized)                                      |  | $ | 49,105  |   | $ | 59,996  |   | $ | 50,463 
|                                                                   | Income taxes (including taxes paid pursuant to the Tax Sharing Agreement) |  |   | 10,121  |   |   | 1,046   |   |   | 1,900  

---

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

F-20

---

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

|                           |                                                    | Capital Stock and Additional Paid-in Capital                                                          |        | Accumulated Other Comprehensive Income (Loss) |   | Loan Receivable from Parent Corporation |   | Accumulated Deficit |        | Comprehensive Income (Loss) |  
|-------------------------- | -------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------ | --------------------------------------------- | - | --------------------------------------- | - | ------------------- | ------ | --------------------------- | -
|
|Balance, December 31, 1999 |                                                    | $                                                                                                     | 40,633 |                                               | $ | (18,944                                 | ) | $                   |       |                             | $
|                           | Comprehensive income year-ended December 31, 2000: |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Net loss                                                                                              |        |                                               |  |                                         |   |                    |        |                             | 
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Other comprehensive income, net of tax:                                                               |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Unrealized holding gains arising during the period, net of income taxes of $3,577                     |        |                                               |  |                                         |   | 6,091               |        |                             | 
|                           |                                                    | Less: Reclassification adjustment for losses included in net loss, net of income tax effect of $6,755 |        |                                               |  |                                         |   | (11,502             | )      |                             | 
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Change in unrealized losses on available-for-sale securities                                          |        |                                               |  |                                         |   | 17,593              |        |                             | 
|                           |                                                    | Minimum pension liability adjustment                                                                  |        |                                               |  |                                         |   | 1,351               |        |                             | 
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Comprehensive income                               |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Distributions to parent corporations               |                                                                                                       |        | (39,452                                       | ) |                                         |  |                     |        |                            |  
|                           | Net repurchase of common stock                     |                                                                                                       |        | (1,180                                        | ) |                                         |  |                     |        |                            |  
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|Balance, December 31, 2000 |                                                    | $                                                                                                     | 1      |                                               | $ |                                        |   | $                   |       |                             | $
|                           | Comprehensive income year-ended December 31, 2001: |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Net income                                                                                            |        |                                               |  |                                         |   |                    |        |                             | 
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Loan to parent corporation                         |                                                                                                       |        |                                              |   |                                         |  |                     |        | (2,536                      | )
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|Balance, December 31, 2001 |                                                    | $                                                                                                     | 1      |                                               | $ |                                        |   | $                   | (2,536 | )                           | $
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Comprehensive income year-ended December 31, 2002: |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           |                                                    | Net income                                                                                            |        |                                               |  |                                         |   |                    |        |                             | 
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Distributions to parent corporations               |                                                                                                       |        |                                              |   |                                         |  |                     |        |                            |  
|                           | Loan to parent corporation                         |                                                                                                       |        |                                              |   |                                         |  |                     |        | (112                        | )
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  
|                           | Balance, December 31, 2002                         |                                                                                                       | $      | 1                                             |   | $                                       |  |                     | $      | (2,648                      | )
|                           |                                                    |                                                                                                       |        |                                               |   |                                         |   |                     |        |                             |  

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

F-21

---

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 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 15.

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.

Effective
August 18, 1999, G-I Holdings, in a series of transactions, contributed certain assets, including the Company's glass fiber manufacturing facility in
Nashville, Tennessee (the "Nashville facility"), and certain related liabilities to the Company. Accordingly, the Company's historical consolidated financial statements reflect the results of
operations, cash flows and assets and liabilities of the Nashville facility.

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.

F-22

---



The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States of America 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 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 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 17.



Cash and cash equivalents include cash on deposit and certain debt securities purchased with original maturities of six months or less.



"Other income (expense), net" includes ($18.1), $0 and $0 million of net realized and unrealized (losses) gains on securities in 2000, 2001 and 2002,
respectively. The determination of cost in computing realized and unrealized gains and losses is based on the specific identification method.

Under
the Credit Agreement (see Note 12), 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.



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 monthly. 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.

F-23

---



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 raw materials 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 principally 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
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. Certain interest charges are capitalized during the period of construction as part of the cost of
property, plant and equipment. Capitalized interest amounted to $4.5, $0.8 and $0.4 million for 2000, 2001 and 2002.



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 fair value. Fair value is determined based on estimated future cash flows. See Note 3.



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 Notes 3 and 4.



Unamortized debt issuance costs of $17.4 and $12.1 million are included in "Other noncurrent assets" in the Consolidated Balance Sheets at
December 31, 2001 and 2002, respectively. Debt issuance costs are amortized to expense over the life of the related debt. In 2000, 2001 and 2002, the Company amortized $2.0, $3.8 and
$4.2 million, respectively, related to such costs.

F-24

---



Purchased software development costs of $6.3 and $4.5 million, respectively, are included in "Other noncurrent assets" in the Consolidated Balance Sheets
at December 31, 2001 and 2002. These costs are amortized to expense over a 5 year period. In 2000, 2001 and 2002, the Company amortized $0.8, $1.8 and $2.0 million, respectively,
related to such costs.



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



Shipping and handling costs are included in "Selling, general and administrative" expenses and amounted to $84.6, $91.3 and $102.6 million in 2000, 2001
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 $5.9,
$5.9 and $6.6 million in 2000, 2001 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 and guarantees of varying duration covering most of its commercial roofing
products and limited warranties covering most of its specialty building products and accessories 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 and legal costs associated with monitoring and settling claims each year. For 2000, 2001 and 2002, administrative and legal costs for
residential and commercial roofing products amounted to $1.4, $1.5 and $0.7 million, respectively. The reserve for product warranty claims is estimated on the basis of historical and projected
claims activity. The accuracy of the estimate of additional costs is dependent on 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.

The
Company recorded a $15.0 million product warranty reserve adjustment in the fourth quarter of 2000 based on an evaluation of claims activity for 2000. This adjustment was
recorded for a specific alleged product defect relating to prior production processes, and accordingly, has been separately presented in the Consolidated Statements of Operations. A settlement was
reached in 1998 in a national class action lawsuit related to this alleged product defect 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.

F-25

---

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, 2002, this action is pending.

The
reserve for product warranty claims consists of the following:

2001

2002(Thousands)Balance, January 1

$
43,656

$
37,641Charged to cost of products sold


19,469


19,970Deductions


(25,484
)

(24,653
)Other





329Balance, December 31

$
37,641

$
33,287




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 8.



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".

The
Company accrues environmental costs when it is probable that it has incurred a liability and the expected amount can be reasonably estimated. 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, 2002, in respect of assumed and other
environmental liabilities, is $1.2 million, and expects insurance recoveries of $1.3 million. Insurance recoveries relate to amounts previously provided for in the balance sheets. The
Company

F-26

---

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 has a Long-Term Incentive Plan for certain employees. The Company accounts for the Long-Term Incentive Plan by applying
Financial Accounting Standards Board Interpretation No. 28, "Accounting for Stock Appreciation Rights and Other Variable Stock Option and Award Plans" ("FIN 28"). FIN 28 requires an entity to
measure compensation as the amount by which the Book Value 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. See Note 14.



Comprehensive income (loss) and its components in annual and interim 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 chosen to disclose comprehensive income
(loss) in the Consolidated Statements of Stockholders' Equity (Deficit).

Changes
in the components of "Accumulated other comprehensive income (loss)" for the years 2000, 2001 and 2002 are as follows:

Unrealized Gains
(Losses) on
Available-for-Sale
Securities

Minimum
Pension
Liability
Adjustment

Accumulated
Other
Comprehensive
Income (Loss)(Thousands)Balance, December 31, 1999

$
(17,593
)
$
(1,351
)
$
(18,944
)Change for the year 2000


17,593


1,351


18,944Balance, December 31, 2000

$


$


$
Change for the year 2001








Balance, December 31, 2001

$


$


$
Change for the year 2002








Balance, December 31, 2002

$


$


$





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.

F-27

---

Note 3. New Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). With the adoption of SFAS
No. 142, effective as of January 1, 2002, goodwill is no longer subject to amortization over its estimated useful life. However, goodwill will be subject to at least an annual assessment
for impairment and more frequently if circumstances indicate a possible impairment. The Company adopted SFAS No. 142 effective as of January 1, 2002 and updated its evaluation at
December 31, 2002 (see Note 4) and noted no impairment existed.

In
August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143 establishes accounting and
reporting standards for legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and the normal operation of a
long-lived asset. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. Upon initial
recognition of such liability, an entity must capitalize the asset retirement cost by increasing the carrying amount of the related long-lived asset and subsequently depreciating the asset
retirement cost over the useful life of the related asset. If the obligation is settled for other than the carrying amount of the liability, the Company would then recognize a gain or loss on
settlement. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company early adopted the provisions of SFAS No. 143 and completed its analysis of SFAS
No. 143 at December 31, 2002 and noted no material asset retirement obligations are required.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 was
effective as of January 1, 2002 and addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. For
long-lived assets to be held and used, an impairment exists when the carrying amount of the asset exceeds its fair value. A long-lived asset is tested for recoverability
whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. For 2002, no asset impairment charge was required.

SFAS
No. 144 also established accounting and reporting standards for long-lived assets to be disposed of by sale and broadened the provisions of Accounting Principles
Board Opinion No. 30 ("APB No. 30"), for accounting for discontinued operations to include a component of an entity rather than a segment of a business. A component of an entity
comprises operations and cash flows that can be clearly distinguished from the rest of the entity. While the Company has no current plans to do so, if it decides in the future to dispose of a
component of the Company that meets the criteria of SFAS No. 144, that component would be reported as a discontinued operation.

In
April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections"
("SFAS No. 145"). SFAS No. 145 eliminates the requirement of SFAS No. 4 that gains and losses on the early extinguishments of debt be recorded as an extraordinary item unless such
gains and losses meet the criteria of APB No. 30 for classification as extraordinary. The rescission of SFAS No. 4 is effective for fiscal years beginning after May 15, 2002. The
Company intends to adopt SFAS No. 145 effective January 1, 2003.

F-28

---



In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No. 146"). SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and supercedes Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS No. 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, and concludes that an entity's commitment to an exit plan does not by itself create a
present obligation that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective of initial measurement of the liability. SFAS No. 146 is
effective for exit or disposal activities that are initiated after December 31, 2002. As the Company has no plans at this time for any exit or disposal activities, the Company believes that
SFAS No. 146 will not have any immediate effect on the Company's financial statements.

In
November 2002, the 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. A subsidiary's guarantee of the debt of its parent is not subject to the initial recognition and measurement provisions of FIN 45 but are subject to its disclosure
requirements. The Company has adopted the disclosure requirements of FIN 45 and will apply the recognition and measurement provisions for all guarantees entered into or modified after
December 31, 2002.

In
January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities" ("FIN 46"). In accordance with FIN 46, a variable interest entity will be
consolidated if either the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or as
a group, the holders of the equity investment at risk lack any one of the following three characteristics of a controlling financial interest: (1) the direct or indirect
ability to make decisions about an entity's activities; (2) the obligation to absorb the expected losses of the entity if they occur; (3) the right to receive the expected residual
returns of the entity if they occur. All companies with variable interests in variable interest entities created after January 31, 2003 shall apply the provisions of FIN 46 immediately. A
public entity with a variable interest in a variable interest entity created before February 1, 2003 shall apply the provisions of FIN 46 to that entity no later than the beginning of the first
interim or annual reporting period beginning after June 15, 2003. The Company does not expect the provisions of FIN 46 to have a material effect on the financial condition or results of
operations of the Company.

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 Statement of Financial

F-29

---

Accounting Standards No. 142 (see Note 3), "Goodwill and Other Intangible Assets," effective January 1, 2002, goodwill is no longer being amortized over its estimated useful
life. However, goodwill will be 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.

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, net sales multiples and multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). The Company's analysis was
completed for each of the reporting units to which the goodwill relates. If the fair value from the methodologies employed are less than the carrying value of the related reporting unit, impairment
losses for goodwill will be 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 sales and EBITDA are based on related industry data. The Company adopted SFAS No. 142 effective
January 1, 2002 and updated its analysis at December 31, 2002 and noted no impairment existed.

Presented
below is a reconciliation showing "Income (loss) before extraordinary item" and "Net income (loss)", as reported in the Consolidated Statements of Operations and as adjusted to
exclude amortization of goodwill.

Year Ended December 31,2000

2001

2002(Thousands)Income (loss) before extraordinary item, as reported

$
(10,827
)
$
18,762

$
32,575Add back: goodwill amortization, net of tax


1,839


1,738


Adjusted income before extraordinary item

$
(8,988
)
$
20,500

$
32,575Net income (loss), as reported

$
(11,157
)
$
18,762

$
32,575Add back: goodwill amortization, net of tax


1,839


1,738


Adjusted net income (loss)

$
(9,318
)
$
20,500

$
32,575


There
were no changes in the carrying amount of goodwill of $63.3 million for the year ended December 31, 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 had 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. This
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

F-30

---

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, 2002). 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 and BMCA filed a defendant class 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. This action is in a preliminary 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. While the Company cannot 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 BMCA with G-I Holdings or an order directing G-I Holdings to
cause BMCA to file for bankruptcy protection. BMCA 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
and the creditors' committee has appealed such ruling to the United States District Court.

For
a further discussion with respect to the history of the foregoing litigation and asbestos-related matters, see Notes 12 and 17.

Note 6. Dispositions

On September 29, 2000, the Company sold certain manufacturing and other assets related to the Compton, California based security products business of LL
Building Products Inc., for net cash proceeds of approximately $27.1 million, which resulted in a pre-tax gain of $17.5 million. The security products business did not
have a material impact on the Company's results of operations.

In
December 2001, the Company sold the Corvallis, Oregon manufacturing facility for approximately $0.9 million. This sale did not have a material impact on the Company's
results of operations.

In
December 2002, the Company sold the Monroe, Georgia manufacturing facility for approximately $1.8 million. This sale did not have a material impact on the Company's
results of operations.

F-31

---

Note 7. 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. See Note 6 regarding disposition of the Corvallis, Oregon facility and the Monroe, Georgia
facility in 2001 and 2002, respectively. As market growth and customer demand improves, the Company may reinstate production at one or more 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.

Note 8. Income Taxes (Provision) Benefit

Income tax (provision) benefit, which has been computed on a separate return basis, consists of the following:

Year Ended December 31,2000

2001

2002(Thousands)Federaldeferred

$
5,423

$
(10,386
)
$
(17,808
)State and local:Current


(1,116
)

(1,046
)

(729
)Deferred


2,052


413


213Total state and local


936


(633
)

(516
)Income tax (provision) benefit

$
6,359

$
(11,019
)
$
(18,324
)


The
differences between the income tax (provision) benefit computed by applying the statutory Federal income tax rate to pre-tax income, and the income tax (provision)
benefit reflected in the Consolidated Statements of Operations are as follows:

Year Ended December 31,2000

2001

2002(Thousands)Statutory (provision) benefit

$
6,015

$
(10,423
)
$
(17,815
)Impact of:State and local taxes, net of Federal benefits


608


(413
)

(336
)Nondeductible goodwill amortization


(185
)

(286
)

Other, net


(79
)

103


(173
)Income tax (provision) benefit

$
6,359

$
(11,019
)
$
(18,324
)


F-32

---



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

December 31,2001

2002(Thousands)Deferred tax liabilities related to property, plant and equipment

$
(24,604
)
$
(32,541
)Deferred tax assets related to:Expenses not yet deducted for tax purposes


36,351


32,992Net operating losses not yet utilized under the Tax Sharing Agreement


21,177


14,879Total deferred tax assets


57,528


47,871Net deferred tax assets

$
32,924

$
15,330


As
of December 31, 2002, the Company had $40.2 million of net operating loss carryforwards available to offset future taxable income, as follows:

Year of Expiration

(Thousands)2020

$
40,212Total net operating loss carryforwards

$
40,212


Management
has determined, based on the Company's history of prior earnings and its expectations for the future, that future taxable income will more likely than not be sufficient to
utilize fully the deferred tax assets recorded. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this
assessment. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

As
of December 31, 2001 and 2002, the Company has included on its balance sheets a "Tax receivable from parent corporations" of $9.0 and $10.3 million, respectively,
representing amounts paid to G-I Holdings under the Tax Sharing Agreement (as defined below), as amended, which the Company will apply under the Tax Sharing Agreement against future tax
sharing payments due to G-I Holdings over the next several years based on current income estimates.

The
Company and its subsidiaries entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994, 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

F-33

---

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, under any circumstances,
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.

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 9. 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,

F-34

---

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 Agreement") under which the Company sells certain of its trade accounts
receivable to BMCA
Receivables Corporation, without recourse, which in turn sells them to a third party, without recourse. The Agreement provides 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 expires in December 2004 and is subject to financial and other covenants, including a
material adverse change in business conditions, financial or otherwise.

As
of December 31, 2001 and 2002, the Company had $99.7 and $105.4 million, respectively, outstanding under the Agreement. The excess of accounts receivable sold over the
net proceeds received is included in "Accounts receivable, other". BMCA Receivables Corporation is not a guarantor under the Company's debt obligations. See Notes 12 and 18. The effective cost to the
Company varies with LIBOR and is included in "Other income (expense), net" and amounted to $6.9, $4.0 and $5.2 million in 2000, 2001 and 2002, respectively.

Note 10. Inventories

At December 31, 2001 and 2002, $9.2 and $14.7 million, respectively, of inventories were valued using the LIFO method. Inventories consist of the
following:

December 31,2001

2002(Thousands)Finished goods

$
66,417

$
80,911Work-in process


8,800


11,850Raw materials and supplies


29,573


30,068Total


104,790


122,829Less LIFO reserve


(2,545
)

(3,347
)Inventories

$
102,245

$
119,482


F-35

---

Note 11. Property, Plant and Equipment

Property,
plant and equipment consists of the following:

December 31,2001

2002(Thousands)Land and land improvements

$
35,677

$
36,177Buildings and building equipment


79,075


83,535Machinery and equipment


389,445


415,982Construction in progress


19,033


16,907Total


523,230


552,601Less accumulated depreciation and amortization


(171,163
)

(206,485
)Property, plant and equipment, net

$
352,067

$
346,116


Included
in the net book value of machinery and equipment at December 31, 2001 and 2002 was $7.7 and $1.5 million, respectively, for assets under capital leases. See
Note 12 regarding the disposition of the Baltimore facility capital lease in 2002. Depreciation expense for 2000, 2001 and 2002 was $36.4, $37.2 and $38.7 million, respectively.

Note 12. Long-Term Debt

Long-term debt consists of the following:

December 31,2001

2002(Thousands)101/2% Senior Notes due 2003

$
34,528

$
34,82073/4% Senior Notes due 2005


149,675


149,76685/8% Senior Notes due 2006


99,753


99,8038% Senior Notes due 2007


99,567


99,6428% Senior Notes due 2008


154,418


154,502Industrial revenue bonds with various interest rates and maturity dates to 2029


22,995


22,925Precious Metal Note due 2003


7,002


7,002Obligations under capital leases (Note 17)


35,141


20,190Other notes payable


2,373


2,478Total


605,452


591,128Less current maturities


(5,556
)

(45,326
)Long-term debt less current maturities

$
599,896

$
545,802


In
July 2000, the Company issued $35.0 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).
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

F-36

---

for general corporate purposes. In connection with the extinguishment of the term loan, unamortized deferred financing fees of approximately $0.3 million, net of tax, were
written-off as an extraordinary loss. The redemption price was 105.875% of the principal amount outstanding, and the premium was recorded as an extraordinary loss, net of tax, of
approximately $1.3 million.

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 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
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 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.

Holders
of the 2003 Notes, the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes (collectively, the "Senior Notes") have the right under the indentures governing such notes
to require the Company to purchase the Senior Notes at a price of 101% of the principal amount thereof, and the Company has the right to redeem the Senior Notes at a price of 101% 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).

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 the Consolidated and Restated Credit Agreement (the "Credit Agreement"). The Credit Agreement matures in August 2003. The terms of the Credit Agreement provide for a
$210 million secured revolving credit facility, the full amount of which is available for letters of credit, provided that total borrowings and outstanding letters of credit may not
exceed $210 million in the aggregate. The Credit Agreement bears interest at a floating rate based on the lenders' Base Rate, as defined, the federal funds rate or the Eurodollar rate. As of
December 31, 2002, there were no outstanding borrowings and $39.3 million of letters of credit were outstanding against the Credit Agreement.

Obligations
under the Credit Agreement, as well as the Company's obligations under a $7.0 million Precious Metal Note due 2003 (defined below) and approximately
$3.4 million of obligations under a standby letter of credit (collectively, the "Other Indebtedness"), aggregated $7.0 million of borrowings and $42.7 million of letters of credit
outstanding at December 31, 2002. All these obligations are secured by a first priority lien on substantially all of the Company's assets and the assets of its subsidiaries (collectively, the
"Collateral") on a pro rata basis. The Credit Agreement has been guaranteed by all of the Company's current and future direct and indirect domestic subsidiaries, other than BMCA Receivables
Corporation. The Senior Notes are secured by a second-priority lien on the same assets 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 Credit Agreement. In connection with these transactions, the Company entered into a security agreement which grants a security interest in the
Collateral in favor of the collateral agent on behalf of the lenders under the Credit Agreement and the Other Indebtedness and the holders of the Company's outstanding Senior Notes. The Company also
entered into a collateral agent agreement, which provides, among other things, for the sharing of proceeds with respect to any foreclosure or other remedy in respect of the Collateral. The Company is
also required to pay unused commitment fees associated with the Credit Agreement. For 2001 and 2002 such fees amounted to $0.5 and $0.8 million, respectively.

F-37

---

Under
the terms of the Credit Agreement and the indentures governing the Senior Notes, the Company is subject to certain financial covenants. These include, among others, interest
coverage, minimum 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 distributions to the Company's parent corporations and on incurring liens, restrictions on investments and other payments. Dividends and other
restricted payments are prohibited, except demand loans of specified amounts made to any parent corporation, subject to limitations, as described in those agreements, in future periods. As of
December 31, 2002, after giving effect to the most restrictive of the aforementioned restrictions, the Company could not have paid dividends or made other restricted payments, except for demand
loans up to $32.8 million to its parent corporations. In addition, if a change of control as defined in the Credit Agreement occurs, the Credit Agreement could be terminated and the loans under
the Credit Agreement 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, 2002,
the Company was in compliance with all covenants under the Credit Agreement and the indentures governing the Senior Notes.

In
connection with entering into the additional $110 million secured revolving credit facility in December 2000, the Company also issued a $7.0 million 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 also provides that in the event the Company shall become the subject of any bankruptcy proceedings, the lenders will, subject to bankruptcy court approval, refinance
and consolidate in full the indebtedness under the Credit Agreement and the Other Indebtedness with a new debtor-in-possession facility (the "DIP Facility") on terms and
conditions substantially identical to the Credit Agreement and the Other Indebtedness, in an aggregate amount equal to the then committed amount under the Credit Agreement plus the principal amount of
the Other Indebtedness. The DIP Facility would mature on August 18, 2004 and would be secured by a first-priority security interest in all of the collateral.

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, and the gain has been deferred. The lessor was granted a security interest in certain equipment at the Chester facility. The lease term
extends to December 2005, with an early buyout option in June 2003. 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, and the gain has been deferred. 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.

The
Company has four industrial revenue bond issues outstanding, which bear interest at short-term floating rates. Interest rates on the foregoing obligations ranged between
0.95% and 2.65% as of December 31, 2002.

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 Senior Notes,

F-38

---

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 indebtedness at December 31, 2001 and 2002
are as follows:

December 31,2001

2002(Thousands)2005 Notes

$
125,727

$
124,3072006 Notes


81,797


81,8382007 Notes


75,920


78,7162008 Notes


115,041


123,602


The
aggregate maturities of long-term debt, including accretion of approximately $1.5 million, as of December 31, 2002 for the next five years and thereafter
are as follows:

(Thousands)2003

$
45,6442004


3,7902005


154,0872006


109,1962007


100,141Thereafter


179,738


In
the above table, maturities for the year 2003 include $35.0 million related to the 2003 Notes, $7.0 million related to the Precious Metal Note and $3.5 million
related to the Chester glass mat manufacturing facility capital lease. Maturities for the year 2004 include $3.8 million for the Chester glass mat manufacturing facility capital lease.
Maturities for the year 2005 include $150.0 million related to the 2005 Notes and $4.0 million related to the Chester glass mat manufacturing facility capital lease. Maturities for the
year 2006 include $100.0 million related to the 2006 Notes and $9.1 million related to the Chester glass mat manufacturing facility capital lease. Maturities for the year 2007 include
$100.0 million related to the 2007 Notes.

Note 13. Benefit Plans

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



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 $4.9, $5.1 and $5.5 million for 2000, 2001 and 2002, respectively.

The
Company provides a defined contribution plan for certain eligible hourly employees. The Company contributes a discretionary matching contribution equal to 100% of each participant's
eligible contributions each year up to a maximum of $1,200 for each participant. Such contributions were $0.3, $0.2 and $0.4 million for 2000, 2001 and 2002, respectively.

F-39

---



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 31,2000

2001

2002(Thousands)Service cost

$
751

$
826

$
998Interest cost


1,066


1,216


1,684Expected return on plan assets


(1,583
)

(1,993
)

(2,906
)Amortization of unrecognized prior service cost


33


33


35Amortization of net losses from earlier periods


14


19


3Net periodic pension cost (benefit)

$
281

$
101

$
(186
)


The
following tables set forth, for the years 2001 and 2002, 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:

December 31,2001

2002(Thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
(20,216
)
$
(23,301
)Service cost


(826
)

(998
)Interest cost


(1,542
)

(1,684
)Amendments





(36
)Actuarial losses


(1,403
)

(2,060
)Benefits paid


686


836Benefit obligation at end of year

$
(23,301
)
$
(27,243
)Change in plan assets:Fair value of plan assets at beginning of year

$
23,435

$
26,239Actual return on plan assets


2,068


1,142Employer contributions


1,422


730Benefits paid


(686
)

(836
)Fair value of plan assets at end of year

$
26,239

$
27,275Reconciliation of funded status:Funded status

$
2,937

$
32Unrecognized prior service cost


231


231Unrecognized actuarial losses


2,315


6,135Net prepaid pension asset recognized in Consolidated Balance Sheets

$
5,483

$
6,398


F-40

---

In determining the projected benefit obligation, the weighted average assumed discount rate was 7.25% and 6.75% for 2001 and 2002, respectively.
The expected long-term rate of return on assets, used in determining net periodic pension cost, was 11% and 11% for 2001 and 2002, respectively. The Company has revised the expected
long-term rate of return for the hourly retirement plans to 9.50% for 2003.

The
Company also provides a nonqualified defined benefit retirement plan for certain key employees. Expense accrued for this plan was not significant for 2000, 2001 and 2002.



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 31,2000

2001

2002(Thousands)Service cost

$
92

$
109

$
110Interest cost


354


318


314Amortization of unrecognized prior service cost


(94
)

(95
)

(94
)Amortization of net gains from earlier periods


(271
)

(269
)

(254
)Net periodic postretirement benefit cost

$
81

$
63

$
76


F-41

---

The
following table sets forth, for the years 2001 and 2002, reconciliations of the beginning and ending balances of the postretirement benefit obligation, funded status and amounts
recognized in the Consolidated Balance Sheets related to postretirement medical and life insurance benefits:

December 31,2001

2002(Thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
(4,845
)
$
(4,682
)Service cost


(109
)

(110
)Interest cost


(318
)

(314
)Actuarial gains (losses)


316


(40
)Benefits paid, net of participant contributions


274


134Benefit obligation at end of year

$
(4,682
)

(5,012
)Change in plan assets:Fair value of plan assets at beginning of year

$


$
Employer contributions


274


134Participant contributions


169


171Benefits paid


(443
)

(305
)Fair value of plan assets at end of year

$


$
Reconciliation of funded status:Funded status

$
(4,682
)
$
(5,012
)Unrecognized prior service cost


(548
)

(453
)Unrecognized actuarial gains


(5,274
)

(4,980
)Net amount recognized in Consolidated Balance Sheets as accrued benefit cost

$
(10,504
)
$
(10,445
)


For
purposes of calculating the accumulated postretirement benefit obligation, the following assumptions were made. Retirees as of December 31, 2002 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. Subject to such lifetime maximum, a
9% annual rate of increase in the Company's per capita cost of providing postretirement medical benefits was assumed for 2001 and 2002 for such retirees under and over age 65. To the extent that the
lifetime maximum benefits have not been reached, the foregoing rates were assumed to decrease gradually to an ultimate rate of 5% and 9%, respectively, by the year 2011 and remain at that level
thereafter. The weighted average assumed discount rate, used in determining the accumulated postretirement benefit obligation was 7.25% and 6.75% for 2001 and 2002, respectively.

The
health care cost trend rate assumption has an effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of December 31, 2001 and 2002 by $9,000 and $3,000, respectively, and the aggregate of the service and interest cost
components of the net periodic postretirement benefit cost for the years 2001 and 2002 by $700 and $200, respectively. A decrease of one percentage point in each year would decrease the accumulated
postretirement benefit obligation as of December 31, 2001 and 2002 by $8,000 and $4,000 respectively, and the aggregate of the service and interest cost

F-42

---

components of the net periodic postretirement benefit cost for the years 2001 and 2002 by $600 and $400, respectively.

Note 14. 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 Preferred Stock is 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 vest rateably over five years and expire after
nine years. Dividends will accrue on the Preferred Stock from the date of issuance at the rate of 6% per annum. The Preferred Stock is 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, is 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, 2002, options to purchase 400,000 shares of Preferred Stock remained available under the 1996 Plan. No options were
granted in 2001 and 2002. Options exercised in 2000 were converted into 1,868 shares of common stock.

The
following is a summary of transactions pertaining to the 1996 Plan:

Year Ended December 31,2000

2001(Number of shares)Outstanding, January 1

168,261

198,559Granted

61,700

Exercised

(3,653
)
Forfeited

(27,749
)
Exchanged for incentive plan units



(198,559
)Outstanding, December 31

198,559

Options exercisable, December 31

66,675




F-43

---



Effective December 31, 2000, the Company adopted the 2001 Long-Term Incentive Plan, which allows 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 Long-Term Incentive Plan authorizes the grant of incentive units ("Incentive Units") to eligible employees. The 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. 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. The Incentive Plan will terminate five years after its effective date of December 2000, unless terminated sooner by the
Committee.

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. An additional 21,001 and
29,735 Incentive Units were granted during 2001 and 2002, respectively. At December 31, 2001 and 2002, 80,114 and 108,674 Incentive Units were outstanding. Compensation expense for such
Incentive Units was $1.7 and $3.4 million in 2001 and 2002, respectively.

Note 15. Business Segment Information

The Company is a leading national manufacturer 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 specialty shingles. Sales of residential roofing products in
2000, 2001 and 2002 were $808.8, $939.4 and $1,001.0 million and represented approximately 67%, 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 2000, 2001 and 2002 were $311.7, $283.7 and $288.4 million and represented approximately 26%, 22% and 21%, respectively, of the Company's
net
sales. Sales of the specialty building products and accessories product line in 2000, 2001 and 2002 were $87.3, $69.9 and $71.3 million and represented approximately 7%, 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 product line did not meet quantitative thresholds in 2000, 2001 and 2002 to be considered as a reportable segment.

F-44

---

Note 16. 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 31,2001

2002(Thousands)Tax receivable from parent corporations

$
9,000

$
10,250Payable to International Specialty Products Inc. ("ISP")

$
(8,910
)
$
(12,621
)Loan receivable from parent corporation

$
2,536

$
2,648


The
Company makes loans to, and borrows from, G-I Holdings and its subsidiaries from time to time at prevailing market rates (between 4.75% and 4.25% during
2002). During 2001 and 2002, the highest amount of loans made by the Company to BHC was $2.5 and $2.6 million, respectively. In addition, no loans were made to the Company by G-I
Holdings and its subsidiaries during 2001 and 2002. Loans to any parent corporation are subject to limitations as outlined in the Credit Agreement and the Senior Notes. The Company advances funds from
time to time on a non-interest bearing basis to G-I Holdings and its subsidiaries. There was no balance outstanding of such advances as of December 31, 2001 and 2002.

During
2000 and 2002, the Company made a distribution of $106.2 million ($59.1 million of which represents a non-cash distribution in 2000 relating to the 1999
receivable from G-I Holdings) and $1.9 million, respectively, to its parent corporations. The distribution of $106.2 million in 2000 represents the write-off of
outstanding advances to the company's parent corporations during 2000 that the Company determined were uncollectible. Included in long-term assets is a tax receivable from parent
corporations of $9.0 and $10.25 million in 2001 and 2002, respectively, representing amounts paid to G-I Holdings under the Tax Sharing Agreement. See Notes 8 and 17.

Mineral Products:The Company and its subsidiaries purchase substantially all of their colored roofing granules requirements
under a requirements contract from ISP, except for the requirements of certain of the Company's roofing plants that are supplied by third parties. The Company and its subsidiaries are continuing to
operate under the terms of the existing agreement, pending negotiation and execution of a new requirements contract with ISP. In 2000, 2001 and 2002, the Company and its subsidiaries purchased in the
aggregate approximately $59.3, $63.4 and $73.2 million, respectively, of mineral products from ISP. The amount payable to ISP at December 31, 2001 and 2002 for such purchases was $8.4
and $11.8 million, respectively.

Management Agreements:Pursuant to a management agreement, a subsidiary of ISP, provides certain general management,
administrative, legal, telecommunications, information 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 below, aggregated $6.0, $6.7 and $6.1 million for 2000, 2001 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, 2001 and 2002 was $0.5 and $0.4 million, respectively. The management agreement is expected to be amended to adjust the management fees payable under
the agreement and to extend the

F-45

---

term of the agreement effective January 1, 2003 through December 31, 2003. 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 2002 was approximately $0.8 million. 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. Based on the services provided in 2002 under the management agreement, the aggregate amount payable
by the Company to ISP under the management agreement for 2003, inclusive of the services provided to G-I Holdings, is expected to be approximately $6.3 million. 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.



Note 17. 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 8. G-I Holdings has advised the Company that it expects to obtain funds to satisfy G-I Holdings' operating expenses from, among other things, loans from
subsidiaries (principally the Company). See Notes 5, 8 and 16.

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 Credit Agreement on payments by the Company to its parent corporations.

During
the twelve months ending December 31, 2003, 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 Credit Agreement 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, 8 and 12.

At
December 31, 2002, the Company has outstanding letters of credit of approximately $39.3 million under the Credit Agreement, which includes approximately
$11.9 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,
2002. 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 and provide
for a single-sum payment consisting of one to three times salary and bonus and related benefits if employment is terminated within a thirty-six month period following the
change in control event. In 2003, irrevocable letters of credit were issued in support of the employment security agreements.

The
leases for certain property, plant and equipment at certain of the Company's glass mat and roofing facilities are accounted for as capital leases. See Note 12. The Company is
also a lessee under

F-46

---

operating leases principally for warehouses, production machinery and equipment, and transportation and computer equipment. Rental expense on operating leases was $18.7, $26.2 and
$25.2 million for 2000, 2001 and 2002, respectively. Future minimum lease payments for properties which were held under long-term noncancellable leases as of December 31,
2002 were as follows:

Capital
Leases

Operating
Leases(Thousands)2003

$
5,062

$
16,5302004


4,954


14,7632005


4,954


13,9572006


9,276


11,2382007





10,602Thereafter





19,903Total minimum payments


24,246

$
86,993Less interest included above


(4,056
)Present value of net minimum lease payments

$
20,190


Included
in net sales in 2000 were net sales to two customers of 13% and 11%, respectively, in 2001, 12% and 11%, respectively, and in 2002, 13% and 11%, respectively. No
other customer accounted for more than 10% of net sales in 2000, 2001 or 2002.

The
Company includes in "Other income (expense), net" certain legal fees related to its business. For 2000, 2001 and 2002 the Company included $2.2, $2.3 and $3.1 million,
respectively, of legal fees in "Other income (expense), net."

Note 18. Guarantor Financial Information

All of the Company's subsidiaries, other than BMCA Receivables Corporation (see Note 9), are guarantors under the Credit Agreement and the indentures
governing the Senior Notes. These guarantees are full, unconditional and joint and several. In addition, Building Materials Manufacturing Corporation ("BMMC"), a wholly-owned subsidiary of the
Company, is a co-obligor on the 2007 Notes.

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.

In
January 2001, certain subsidiaries of the Company were merged into BMMC, and accordingly, certain reclassifications were made to the guarantor financial statements to conform
to current year presentations.

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 information for the Company, the guarantor subsidiaries and the
non-guarantor subsidiary is not included herein, because management has determined that such information is not material to investors.

F-47

---



Condensed Consolidating Statement of Operations
Year Ended December 31, 2000
(Thousands)

|                                                           |                                               | Parent
Company           |           | Guarantor
Subsidiaries |           | Eliminations |         | Consolidated |         
|---------------------------------------------------------- | --------------------------------------------- | ------------------------ | --------- | ---------------------- | --------- | ------------ | ------- | ------------ | --------
|Net sales                                                  |                                               | $                        | 1,081,918 |                        | $         | 125,841      |         | $            |        
|Intercompany net sales                                     |                                               |                          | 45,771    |                        |           | 822,283      |         |              | (868,054
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|                                                           |                                               | Total net sales          |           |                        | 1,127,689 |              |         | 948,124      |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|Costs and expenses:                                        |                                               |                          |           |                        |           |              |         |              |         
|                                                           | Cost of products sold                         |                          |           | 916,485                |           |              | 845,345 |              |         
|                                                           | Selling, general and administrative           |                          |           | 169,575                |           |              | 80,967  |              |         
|                                                           | Goodwill amortization                         |                          |           | 1,304                  |           |              | 720     |              |         
|                                                           | Transition service agreement (income) expense |                          |           | 100                    |           |              | (100    | )            |         
|                                                           | Gain on sale of assets                        |                          |           |                       |           |              | (17,505 | )            |         
|                                                           | Warranty reserve adjustment                   |                          |           | 15,000                 |           |              |        |              |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|                                                           |                                               | Total costs and expenses |           |                        | 1,102,464 |              |         | 909,427      |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|Operating income                                           |                                               |                          | 25,225    |                        |           | 38,697       |         |              |        
|Equity in earnings of subsidiaries                         |                                               |                          | 16,251    |                        |           |             |         |              | (16,251 
|Intercompany licensing income (expense), net               |                                               |                          | (32,458   | )                      |           | 32,458       |         |              |         
|Interest expense                                           |                                               |                          | (24,932   | )                      |           | (28,536      | )       |              |         
|Other income (expense), net                                |                                               |                          | (10,818   | )                      |           | (16,822      | )       |              |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|Income (loss) before income taxes and extraordinary losses |                                               |                          | (26,732   | )                      |           | 25,797       |         |              | (16,251 
|Income tax (provision) benefit                             |                                               |                          | 15,905    |                        |           | (9,546       | )       |              |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|Income (loss) before extraordinary losses                  |                                               |                          | (10,827   | )                      |           | 16,251       |         |              | (16,251 
|Extraordinary losses, net of income tax benefits of $194   |                                               |                          | (330      | )                      |           |             |         |              |         
|                                                           |                                               |                          |           |                        |           |              |         |              |         
|Net income (loss)                                          |                                               | $                        | (11,157   | )                      | $         | 16,251       |         | $            | (16,251 
|                                                           |                                               |                          |           |                        |           |              |         |              |         

F-48

---

Condensed Consolidating Statement of Operations
Year Ended December 31, 2001
(Thousands)

|                                             |                                               | Parent
Company           |           | Guarantor
Subsidiaries |           | Eliminations |         | Consolidated |         
|-------------------------------------------- | --------------------------------------------- | ------------------------ | --------- | ---------------------- | --------- | ------------ | ------- | ------------ | --------
|Net sales                                    |                                               | $                        | 1,182,581 |                        | $         | 110,461      |         | $            |        
|Intercompany net sales                       |                                               |                          | 90,238    |                        |           | 892,246      |         |              | (982,484
|                                             |                                               |                          |           |                        |           |              |         |              |         
|                                             |                                               | Total net sales          |           |                        | 1,272,819 |              |         | 1,002,707    |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|Costs and expenses:                          |                                               |                          |           |                        |           |              |         |              |         
|                                             | Cost of products sold                         |                          |           | 1,003,072              |           |              | 903,157 |              |         
|                                             | Selling, general and administrative           |                          |           | 198,336                |           |              | 71,944  |              |         
|                                             | Goodwill amortization                         |                          |           | 1,303                  |           |              | 721     |              |         
|                                             | Transition service agreement (income) expense |                          |           | 100                    |           |              | (100    | )            |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|                                             |                                               | Total costs and expenses |           |                        | 1,202,811 |              |         | 975,722      |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|Operating income                             |                                               |                          | 70,008    |                        |           | 26,985       |         |              |        
|Equity in earnings of subsidiaries           |                                               |                          | 29,273    |                        |           |             |         |              | (29,273 
|Intercompany licensing income (expense), net |                                               |                          | (35,477   | )                      |           | 35,477       |         |              |         
|Interest expense                             |                                               |                          | (43,357   | )                      |           | (17,446      | )       |              |         
|Other income (expense), net                  |                                               |                          | (7,858    | )                      |           | 1,449        |         |              |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|Income before income taxes                   |                                               |                          | 12,589    |                        |           | 46,465       |         |              | (29,273 
|Income tax (provision) benefit               |                                               |                          | 6,173     |                        |           | (17,192      | )       |              |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|Net income                                   |                                               | $                        | 18,762    |                        | $         | 29,273       |         | $            | (29,273 
|                                             |                                               |                          |           |                        |           |              |         |              |         

F-49

---

Condensed Consolidating Statement of Operations
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:                          |                                               |                          |           |                        |           |              |         |              |         
|                                             | Cost of products sold                         |                          |           | 1,032,525              |           |              | 905,890 |              |         
|                                             | Selling, general and administrative           |                          |           | 216,432                |           |              | 73,019  |              |         
|                                             | Transition service agreement (income) expense |                          |           | 100                    |           |              | (100    | )            |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|                                             |                                               | Total costs and expenses |           |                        | 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 (provision) benefit               |                                               |                          | 14,178    |                        |           | (32,502      | )       |              |         
|                                             |                                               |                          |           |                        |           |              |         |              |         
|Net income                                   |                                               | $                        | 32,575    |                        | $         | 57,781       |         | $            | (57,781 
|                                             |                                               |                          |           |                        |           |              |         |              |         

F-50

---



Condensed Consolidating Balance Sheet
December 31, 2001
(Thousands)

|                                                           |                                      | Parent
Company            |          | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiary |        | Eliminations |        | Consolidated |       
|---------------------------------------------------------- | ------------------------------------ | ------------------------- | -------- | ---------------------- | ------ | ------------------------- | ------ | ------------ | ------ | ------------ | ------
|ASSETS                                                     |                                      |                           |          |                        |        |                           |        |              |        |              |       
|Current Assets:                                            |                                      |                           |          |                        |        |                           |        |              |        |              |       
|                                                           | Cash and cash equivalents            |                           | $        | 133                    |        | $                         | 46,254 |              | $      |             |       
|                                                           | Accounts receivable, trade, net      |                           |          | 10,726                 |        |                           | 12,764 |              |        |             |       
|                                                           | Accounts receivable, other           |                           |          | 5,005                  |        |                           | 1,827  |              |        | 32,937       |       
|                                                           | Inventories                          |                           |          | 63,077                 |        |                           | 39,168 |              |        |             |       
|                                                           | Other current assets                 |                           |          | 1,487                  |        |                           | 2,403  |              |        |             |       
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|                                                           |                                      | Total Current Assets      |          |                        | 80,428 |                           |        | 102,416      |        |              | 32,937
|Investment in subsidiaries                                 |                                      |                           | 379,589  |                        |        |                          |        |              |       |              |       
|Intercompany loans including accrued interest              |                                      |                           | 81,781   |                        |        | (81,781                   | )      |              |       |              |       
|Due from (to) subsidiaries, net                            |                                      |                           | (213,596 | )                      |        | 209,525                   |        |              | 4,071  |              |       
|Property, plant and equipment, net                         |                                      |                           | 45,128   |                        |        | 306,939                   |        |              |       |              |       
|Excess of cost over net assets of businesses acquired, net |                                      |                           | 40,080   |                        |        | 23,214                    |        |              |       |              |       
|Deferred income tax benefits                               |                                      |                           | 32,924   |                        |        |                          |        |              |       |              |       
|Tax receivable from parent corporations                    |                                      |                           | 9,000    |                        |        |                          |        |              |       |              |       
|Other assets                                               |                                      |                           | 16,654   |                        |        | 16,605                    |        |              |       |              |       
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|Total Assets                                               |                                      | $                         | 471,988  |                        | $      | 576,918                   |        | $            | 37,008 |              | $     
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|LIABILITIES AND STOCKHOLDERS'                              |                                      |                           |          |                        |        |                           |        |              |        |              |       
|EQUITY (DEFICIT)                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|Current Liabilities:                                       |                                      |                           |          |                        |        |                           |        |              |        |              |       
|                                                           | Current maturities of long-term debt |                           | $        |                       |        | $                         | 5,556  |              | $      |             |       
|                                                           | Accounts payable                     |                           |          | 19,393                 |        |                           | 38,842 |              |        |             |       
|                                                           | Payable to related parties           |                           |          | 1,296                  |        |                           | 7,614  |              |        |             |       
|                                                           | Accrued liabilities                  |                           |          | 23,333                 |        |                           | 20,215 |              |        |             |       
|                                                           | Reserve for product warranty claims  |                           |          | 14,900                 |        |                           |       |              |        |             |       
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|                                                           |                                      | Total Current Liabilities |          |                        | 58,922 |                           |        | 72,227       |        |              |      
|Long-term debt less current maturities                     |                                      |                           | 438,374  |                        |        | 161,522                   |        |              |       |              |       
|Reserve for product warranty claims                        |                                      |                           | 22,358   |                        |        | 383                       |        |              |       |              |       
|Other liabilities                                          |                                      |                           | 13,973   |                        |        | 205                       |        |              |       |              |       
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|Total Liabilities                                          |                                      |                           | 533,627  |                        |        | 234,337                   |        |              |       |              |       
|Total Stockholders' Equity (Deficit)                       |                                      |                           | (61,639  | )                      |        | 342,581                   |        |              | 37,008 |              |       
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       
|Total Liabilities and Stockholders' Equity (Deficit)       |                                      | $                         | 471,988  |                        | $      | 576,918                   |        | $            | 37,008 |              | $     
|                                                           |                                      |                           |          |                        |        |                           |        |              |        |              |       

F-51

---

Condensed Consolidating Balance Sheet
December 31, 2002
(Thousands)

|                                                           |                                      | Parent
Company            |          | Guarantor
Subsidiaries |         | Non-
Guarantor
Subsidiary |        | Eliminations |        | Consolidated |       
|---------------------------------------------------------- | ------------------------------------ | ------------------------- | -------- | ---------------------- | ------- | ------------------------- | ------ | ------------ | ------ | ------------ | ------
|ASSETS                                                     |                                      |                           |          |                        |         |                           |        |              |        |              |       
|Current Assets:                                            |                                      |                           |          |                        |         |                           |        |              |        |              |       
|                                                           | Cash and cash equivalents            |                           | $        | 60                     |         | $                         | 96,113 |              | $      |             |       
|                                                           | Accounts receivable, trade, net      |                           |          | 8,216                  |         |                           | 13,685 |              |        |             |       
|                                                           | Accounts receivable, other           |                           |          | 6,294                  |         |                           | 845    |              |        | 34,785       |       
|                                                           | Inventories                          |                           |          | 78,066                 |         |                           | 41,416 |              |        |             |       
|                                                           | Other current assets                 |                           |          | 1,575                  |         |                           | 1,968  |              |        |             |       
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|                                                           |                                      | Total Current Assets      |          |                        | 94,211  |                           |        | 154,027      |        |              | 34,785
|Investment in subsidiaries                                 |                                      |                           | 437,856  |                        |         |                          |        |              |       |              |       
|Intercompany loans including accrued interest              |                                      |                           | 59,903   |                        |         | (59,903                   | )      |              |       |              |       
|Due from (to) subsidiaries, net                            |                                      |                           | (195,599 | )                      |         | 192,889                   |        |              | 2,710  |              |       
|Property, plant and equipment, net                         |                                      |                           | 36,075   |                        |         | 310,041                   |        |              |       |              |       
|Excess of cost over net assets of businesses acquired, net |                                      |                           | 40,080   |                        |         | 23,214                    |        |              |       |              |       
|Deferred income tax benefits                               |                                      |                           | 15,330   |                        |         |                          |        |              |       |              |       
|Tax receivable from parent corporations                    |                                      |                           | 10,250   |                        |         |                          |        |              |       |              |       
|Other assets                                               |                                      |                           | 6,486    |                        |         | 18,900                    |        |              |       |              |       
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|Total Assets                                               |                                      | $                         | 504,592  |                        | $       | 639,168                   |        | $            | 37,495 |              | $     
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|LIABILITIES AND STOCKHOLDERS'                              |                                      |                           |          |                        |         |                           |        |              |        |              |       
|EQUITY (DEFICIT)                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|Current Liabilities:                                       |                                      |                           |          |                        |         |                           |        |              |        |              |       
|                                                           | Current maturities of long-term debt |                           | $        | 34,820                 |         | $                         | 10,506 |              | $      |             |       
|                                                           | Accounts payable                     |                           |          | 29,249                 |         |                           | 43,971 |              |        |             |       
|                                                           | Payable to related parties, net      |                           |          | 2,788                  |         |                           | 9,833  |              |        |             |       
|                                                           | Accrued liabilities                  |                           |          | 18,802                 |         |                           | 32,115 |              |        |             |       
|                                                           | Reserve for product warranty claims  |                           |          | 14,900                 |         |                           |       |              |        |             |       
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|                                                           |                                      | Total Current Liabilities |          |                        | 100,559 |                           |        | 96,425       |        |              |      
|Long-term debt less current maturities                     |                                      |                           | 404,071  |                        |         | 141,731                   |        |              |       |              |       
|Reserve for product warranty claims                        |                                      |                           | 17,935   |                        |         | 452                       |        |              |       |              |       
|Other liabilities                                          |                                      |                           | 13,148   |                        |         | 199                       |        |              |       |              |       
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|Total Liabilities                                          |                                      |                           | 535,713  |                        |         | 238,807                   |        |              |       |              |       
|Total Stockholders' Equity (Deficit)                       |                                      |                           | (31,121  | )                      |         | 400,361                   |        |              | 37,495 |              |       
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       
|Total Liabilities and Stockholders' Equity (Deficit)       |                                      | $                         | 504,592  |                        | $       | 639,168                   |        | $            | 37,495 |              | $     
|                                                           |                                      |                           |          |                        |         |                           |        |              |        |              |       

F-52

---



Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2000
(Thousands)

|                                                    |                                                                              | Parent
Company                                   |        | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |         | Consolidated |  
|--------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------ | ------ | ---------------------- | ------ | --------------------------- | ------- | ------------ | -
|Cash and cash equivalents, beginning of year        |                                                                              | $                                                | 203    |                        | $      | 55,749                      |         | $            | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Cash provided by (used in) operating activities:    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|                                                    | Net income (loss)                                                            |                                                  |        | (27,408                | )      |                             | 16,251  |              |  
|                                                    | Adjustments to reconcile net income (loss) to net                            |                                                  |        |                        |        |                             |         |              |  
|                                                    |                                                                              | cash provided by (used in) operating activities: |        |                        |        |                             |         |              |  
|                                                    |                                                                              | Extraordinary losses                             |        |                        | 330    |                             |         |             |  
|                                                    |                                                                              | Gain on sale of assets                           |        |                        |       |                             |         | (17,505      | )
|                                                    |                                                                              | Depreciation                                     |        |                        | 4,406  |                             |         | 31,944       |  
|                                                    |                                                                              | Goodwill and other amortization                  |        |                        | 2,146  |                             |         | 720          |  
|                                                    |                                                                              | Deferred income taxes                            |        |                        | (7,475 | )                           |         |             |  
|                                                    |                                                                              | Noncash interest charges                         |        |                        | 1,922  |                             |         | 726          |  
|                                                    | (Increase) decrease in working capital items                                 |                                                  |        | (33,237                | )      |                             | 5,107   |              |  
|                                                    | Increase in product warranty claims                                          |                                                  |        | 9,317                  |        |                             | 25      |              |  
|                                                    | Purchases of trading securities                                              |                                                  |        |                       |        |                             | (980    | )            |  
|                                                    | Proceeds from sales of trading securities                                    |                                                  |        |                       |        |                             | 2,172   |              |  
|                                                    | Proceeds from sale of accounts receivable                                    |                                                  |        | 925                    |        |                             |        |              |  
|                                                    | (Increase) decrease in other assets                                          |                                                  |        | 3,180                  |        |                             | (1,916  | )            |  
|                                                    | Decrease in other liabilities                                                |                                                  |        | (2,303                 | )      |                             | (373    | )            |  
|                                                    | Change in net receivable from/payable to related parties/parent corporations |                                                  |        | 37,493                 |        |                             | (43,126 | )            |  
|                                                    | Other, net                                                                   |                                                  |        | 2,785                  |        |                             | (2,268  | )            |  
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Net cash used in operating activities               |                                                                              |                                                  | (7,919 | )                      |        | (9,223                      | )       |              | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Cash provided by (used in) investing activities:    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|                                                    | Capital expenditures                                                         |                                                  |        | (1,417                 | )      |                             | (60,126 | )            |  
|                                                    | Proceeds from sale of assets                                                 |                                                  |        |                       |        |                             | 31,702  |              |  
|                                                    | Purchases of available-for-sale securities                                   |                                                  |        |                       |        |                             | (882    | )            |  
|                                                    | Proceeds from sales of available-for-sale securities                         |                                                  |        |                       |        |                             | 58,284  |              |  
|                                                    | Proceeds from sales of other short-term investments                          |                                                  |        |                       |        |                             | 1,590   |              |  
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Net cash provided by (used in) investing activities |                                                                              |                                                  | (1,417 | )                      |        | 30,568                      |         |              | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Cash provided by (used in) financing activities:    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|                                                    | Proceeds from issuance of long-term debt                                     |                                                  |        | 34,044                 |        |                             | 7,002   |              |  
|                                                    | Increase in borrowings under revolving credit facility                       |                                                  |        | 70,000                 |        |                             |        |              |  
|                                                    | Repayments of long-term debt                                                 |                                                  |        | (34,198                | )      |                             | (3,858  | )            |  
|                                                    | Distributions to parent corporations                                         |                                                  |        | (47,029                | )      |                             |        |              |  
|                                                    | Repurchase of common stock                                                   |                                                  |        | (1,180                 | )      |                             |        |              |  
|                                                    | Financing fees and expenses                                                  |                                                  |        | (2,763                 | )      |                             | (7,232  | )            |  
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Net cash provided by (used in) financing activities |                                                                              |                                                  | 18,874 |                        |        | (4,088                      | )       |              | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Net change in cash and cash equivalents             |                                                                              |                                                  | 9,538  |                        |        | 17,257                      |         |              | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  
|Cash and cash equivalents, end of year              |                                                                              | $                                                | 9,741  |                        | $      | 73,006                      |         | $            | 
|                                                    |                                                                              |                                                  |        |                        |        |                             |         |              |  

F-53

---

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2001
(Thousands)

|                                                 |                                                                                                    | Parent
Company                  |         | Guarantor
Subsidiaries |       | Non-
Guarantor
Subsidiary |         | Consolidated |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ------------------------------- | ------- | ---------------------- | ----- | ------------------------- | ------- | ------------ | -
|Cash and cash equivalents, beginning of year     |                                                                                                    | $                               | 9,741   |                        | $     | 73,006                    |         | $            | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Cash provided by (used in) operating activities: |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|                                                 | Net income (loss)                                                                                  |                                 |         | (10,511                | )     |                           | 29,273  |              |  
|                                                 | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                 |         |                        |       |                           |         |              |  
|                                                 |                                                                                                    | Depreciation                    |         |                        | 2,764 |                           |         | 34,432       |  
|                                                 |                                                                                                    | Goodwill and other amortization |         |                        | 3,073 |                           |         | 721          |  
|                                                 |                                                                                                    | Deferred income taxes           |         |                        | 9,973 |                           |         |             |  
|                                                 |                                                                                                    | Noncash interest charges        |         |                        | 3,270 |                           |         | 1,286        |  
|                                                 | (Increase) decrease in working capital items                                                       |                                 |         | (39,153                | )     |                           | 2,477   |              |  
|                                                 | Decrease in product warranty claims                                                                |                                 |         | (5,829                 | )     |                           | (186    | )            |  
|                                                 | Proceeds from sale of accounts receivable                                                          |                                 |         | 34,669                 |       |                           |        |              |  
|                                                 | Increase in other assets                                                                           |                                 |         | (2,673                 | )     |                           | (1,308  | )            |  
|                                                 | Decrease in other liabilities                                                                      |                                 |         | (85                    | )     |                           | (8      | )            |  
|                                                 | Change in net receivable from/payable to related parties/parent corporations                       |                                 |         | 70,908                 |       |                           | (61,118 | )            |  
|                                                 | Other, net                                                                                         |                                 |         | 131                    |       |                           | 1,155   |              |  
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Net cash provided by operating activities        |                                                                                                    |                                 | 66,537  |                        |       | 6,724                     |         |              | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Cash provided by (used in) investing activities: |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|                                                 | Capital expenditures                                                                               |                                 |         | (915                   | )     |                           | (27,170 | )            |  
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Net cash used in investing activities            |                                                                                                    |                                 | (915    | )                      |       | (27,170                   | )       |              | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Cash provided by (used in) financing activities: |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|                                                 | Decrease in borrowings under revolving credit facility                                             |                                 |         | (70,000                | )     |                           |        |              |  
|                                                 | Repayments of long-term debt                                                                       |                                 |         | (175                   | )     |                           | (5,798  | )            |  
|                                                 | Loan to parent corporation                                                                         |                                 |         | (2,536                 | )     |                           |        |              |  
|                                                 | Financing fees and expenses                                                                        |                                 |         | (2,519                 | )     |                           | (508    | )            |  
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Net cash used in financing activities            |                                                                                                    |                                 | (75,230 | )                      |       | (6,306                    | )       |              | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Net change in cash and cash equivalents          |                                                                                                    |                                 | (9,608  | )                      |       | (26,752                   | )       |              | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  
|Cash and cash equivalents, end of year           |                                                                                                    | $                               | 133     |                        | $     | 46,254                    |         | $            | 
|                                                 |                                                                                                    |                                 |         |                        |       |                           |         |              |  

F-54

---



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: |                                 |        |                        |        |                           |         |              |  
|                                                 |                                                                                                    | Depreciation                    |        |                        | 2,523  |                           |         | 36,132       |  
|                                                 |                                                                                                    | Goodwill and other 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 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                    | )      |                           | 3,741   |              |  
|                                                 |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|Net cash provided by operating activities        |                                                                                                    |                                 | 4,315  |                        |        | 97,490                    |         |              | 
|                                                 |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|Cash provided by (used in) investing activities: |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|                                                 | Capital expenditures                                                                               |                                 |        | (2,109                 | )      |                           | (32,454 | )            |  
|                                                 |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|Net cash used in investing activities            |                                                                                                    |                                 | (2,109 | )                      |        | (32,454                   | )       |              | 
|                                                 |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|Cash provided by (used in) financing activities: |                                                                                                    |                                 |        |                        |        |                           |         |              |  
|                                                 | Repayments of long-term debt                                                                       |                                 |        |                       |        |                           | (15,177 | )            |  
|                                                 | Distributions to parent corporations                                                               |                                 |        | (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-55

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SUPPLEMENTARY DATA (UNAUDITED)
Quarterly Financial Data (Unaudited)

|                                  |  | 2001 by Quarter |       | 2002 by Quarter |  
|--------------------------------- |  | --------------- | ----- | --------------- | -
|
|
|Net sales                         |  | $               | 265.0 |                 | $
|Cost of products sold             |  |                 | 199.0 |                 |  
|                                  |  |                 |       |                 |  
|Gross profit                      |  | $               | 66.0  |                 | $
|                                  |  |                 |       |                 |  
|Operating income                  |  | $               | 9.5   |                 | $
|                                  |  |                 |       |                 |  
|Interest expense                  |  | $               | 15.2  |                 | $
|                                  |  |                 |       |                 |  
|Income (loss) before income taxes |  | $               | (7.1  | )               | $
|Income tax (provision) benefit    |  |                 | 2.6   |                 |  
|                                  |  |                 |       |                 |  
|Net income (loss)                 |  | $               | (4.5  | )               | $
|                                  |  |                 |       |                 |  

F-56

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SCHEDULE II

BUILDING MATERIALS CORPORATION OF AMERICA        VALUATION AND QUALIFYING ACCOUNTS        Year Ended December 31, 2000

|Description                       |                                           | Balance
January 1,
2000                |  | Charged to
Sales or
Expenses |        | Deductions |   | Other   |  | Balance
December 31,
2000 |        
|--------------------------------- | ----------------------------------------- | -------------------------------------- |  | ---------------------------- | ------ | ---------- | - | ------- |  | ------------------------- | -------
|
|Valuation and Qualifying Accounts |                                           |                                        |  |                              |        |            |   |         |  |                           |        
|                                  | Deducted from Assets To Which They Apply: |                                        |  |                              |        |            |   |         |  |                           |        
|                                  |                                           | Allowance for doubtful accounts        |  | $                            | 4,019  |            | $ | 413     |  | $                         | 2,634  
|                                  |                                           | Allowance for discounts                |  |                              | 23,195 |            |   | 110,291 |  |                           | 107,683
|                                  |                                           | Reserve for inventory market valuation |  |                              | 1,717  |            |   | 658     |  |                           | 1,083  
|                                  |                                           | Reserve for product warranty claims    |  |                              | 34,314 |            |   | 32,926  |  |                           | 23,584 

Year Ended December 31, 2001

|Description                       |                                           | Balance
January 1,
2001                |  | Charged to
Sales or
Expenses |        | Deductions |   | Other   |  | Balance
December 31,
2001 |        
|--------------------------------- | ----------------------------------------- | -------------------------------------- |  | ---------------------------- | ------ | ---------- | - | ------- |  | ------------------------- | -------
|
|Valuation and Qualifying Accounts |                                           |                                        |  |                              |        |            |   |         |  |                           |        
|                                  | Deducted from Assets To Which They Apply: |                                        |  |                              |        |            |   |         |  |                           |        
|                                  |                                           | Allowance for doubtful accounts        |  | $                            | 1,798  |            | $ | 346     |  | $                         | 786    
|                                  |                                           | Allowance for discounts                |  |                              | 25,803 |            |   | 141,107 |  |                           | 133,158
|                                  |                                           | Reserve for inventory market valuation |  |                              | 1,003  |            |   | 3,059   |  |                           | 741    
|                                  |                                           | Reserve for product warranty claims    |  |                              | 43,656 |            |   | 19,469  |  |                           | 25,484 

Year Ended December 31, 2002

|Description                       |                                           | Balance
January 1,
2002                |  | Charged to
Sales or
Expenses |        | Deductions |   | Other   |  | Balance
December 31,
2002 |        
|--------------------------------- | ----------------------------------------- | -------------------------------------- |  | ---------------------------- | ------ | ---------- | - | ------- |  | ------------------------- | -------
|
|Valuation and Qualifying Accounts |                                           |                                        |  |                              |        |            |   |         |  |                           |        
|                                  | Deducted from Assets To Which They Apply: |                                        |  |                              |        |            |   |         |  |                           |        
|                                  |                                           | Allowance for doubtful accounts        |  | $                            | 1,058  |            | $ | 863     |  | $                         | 437    
|                                  |                                           | Allowance for discounts                |  |                              | 34,052 |            |   | 163,247 |  |                           | 160,146
|                                  |                                           | Reserve for inventory market valuation |  |                              | 3,321  |            |   | 675     |  |                           | 1,458  
|                                  |                                           | Reserve for product warranty claims    |  |                              | 37,641 |            |   | 19,970  |  |                           | 24,653 

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Notes:



S-1

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