Document ZJqY2Y0jmn0jMbEOxpMwmEQxO

GAF CORPORATION Annual Report 1982 PLAINTIFF'S EXHIBIT GF-1986 Financial Highlights Tnojsancs c1 jo a-s Excaoi Per Sna-e -no',":: Nei Sales Income (Loss) from Continuing Operations Income (Loss) from Discontinued Segments Extraordinary Credits Net Income (Loss) Earnings per Common Share primary Continuing Discontinued Extraordinary Net Income iLoss i Felly Diluted Continuing Discontinued Extraordinary Net Income Cash Dividends per Share Preferred Common c-gure omitted--noi dilutive 1982 S 623.236 S 12.182 5.303 38.744 S 56.229 -- E E~: S "A C-- -- ? :e -3 : J ' ~~~ _` : r '3 222 _- r s .64 .37 2.70 s 3.71 $ .70 .30 2.17 $ 3.17 $ 1.20 $ .50 5 2 2a c cc -- $ e; 5 ' 5~ 3/ -- 5 1 50 $ * 20 $ SO 3 :. ': . -- 3 Shareholders Information The 1983 Annuel Meeting oi Shareholders will De held at 10 00 a.m.. Thursday Apni 28. at the Radisson plaza Chanotte Hotel. Two NCN8 Plaza. Charlotte North Carolina Sloe*. Tansier Ageni ana Registrar C'tiDanK N A ri Wan Street Son 3'95 New 'I'ofw nv '0CM3 2'21 558-7367 GAF o^ers holders oi <ts common ano preferred stocK ine ooDonuh'lv lo Duv aadn.ona' snares ihrougr an ajicmatic CjivtGenC reinvesiment se^ ce administered a> C*tioan. N A Fq' funner oeiai'S -O'-.iac1 C'iiDan. N A * i1 wa>i Streer Son 3197 New vOK NV `OC-i 3 >2'2> 552 76'9 a ;oo y me rc'-oa^* > An^a' Reoc'- c-' p vm 0 k as ''iec v. - 'i->e Sec..r.i.es arc E'^ongr 3c~miSSi~r' !> cotai''ec "ee 0; jna.'ge c. wr i rr ^ Contents Financial Hiqhi cpIS Messaoe (obu- Snaie-o oe- Cnemica-S Cne^ica P'cc-c? Sui cnc Maier 2i O'^O ProC-C'S Coroorate anc Ofrc; Stress Directors anc On cers Van.-igemenl 3 Z` SC-sS.on - - - j wOrid''|C- a^c Read's CwT' >' . s Rev ew or Corsonca'.cc F ';.a- ^ ci "'\v O" Corsonoa'eo Siaie~er'i4 :/ i--; y e za'-'.^cs Corso-icaiec 5:a;e~e-` 5 cc P'OS'I c- CcnsC'-oaien Ba a-:? S''-3--: NC`- T I `.r? ; a;.:-- c - - ------ Ajc tO'S Oc-n-.:"1 SjOC S rn ' 1 GAF 13211 ~cA6Z ue.r I.'-' J' 'enrene0: rene' :si * men c* G Ar s an :*-s* o.-. -: n . ` 5 Kcda- .in-; - me Ecorcm-c Rec-nen ''a - " '.:' Sert'emen o- on a.\$i ' azi ': Ea;:~ - Kocak nAc' h'c a :ene': c* ;*: : ~ . incua-r.c a S9 5 m...p'* cas" cav-'en , missa* of an Eastman *ooa* ca:er'' >*_'r - me company cem time ms e.ena :* '? sene o' acD'cx.rrate , ' "r' .m - Excess funds <rcm :ne Term:r.a:ez *e* pian were me resu!` c: zrc* :ar>e ~ over :he years cv me`urc s ^onsce's * successful conc uSiOr, .r Ja'ua-. * s-EL :* C. - r restructuring program wnc-. -ec-cec sa - employment accut 60 cenen \'y r "*r an annu.:* cor:ract ra* c-s-.-nrs.- : arc oenef'Cia' esme'racc-'~* - 'n - T**,-s sc .sc..sseo ~ one' =6 : :': ; *** * - Losses n o.. .cmg "'-6' = ; .-.e'- - ncjsirv enonec 1 ~ - n :. : ;' " Cut tre e^e:: cm c" - :s os : ~ ic.ver costs `:r as o'* a : . .n- reduced n^enc 0':;.o f : :- `O' res cer: n -o:' c '.Vn' er gane'sies cenn n o ': n OC.vr,,*,a'oi,-f:iG -7...- - j ; ; ~ ^ anc we ,<?'? n. e ': ` ; _ " . ;. * ciiu Gaf 13212 1982 5a es were c-f t"c..cro-o me "tt-str. GAF nceasec ts ..cr.c.vce sra'e ; ma--e* `ora rjToer o' aoec at. c'e'-'ca s GAF 5 '.e-, i go amcrg u 5 ca :z.'sa ' es ,n operating return on cnemica s assets ana eve expect to na.ntam tnat strengm - con- rg years New product development, tnouC' cost.y and often r.sky means con:,rued r.gh return on investment long nto the future GAF a pioneer in acetylene chemicals production m America, remains a world leader today m this highly specialized field of chemistry Capital exoenp.tures were Si 7 ~ m.,iion m 1982 with projects carefully selected ana targeted at increasing capacity for cnermcais modernizing our network of building materials plants and necessary pollution control programs On March 22 the company announced ;t had receded inquiries ana wou.c consicer the possi ble sale ol our Puiiomg materials business the merger of the entire corporation or a possip'e leveraged buyout We have hao a great many discussions witn interestea corPOrat:ons private g'oups and investment banx.e's Some na.c cropped out tut others are ccrtmurg dis cussions Some potential ourchase's to- me entire company have been cetenec bv me pros pect of continued asbestos itigai.on esoec.arv m view ot me Manville oet'tion 10' oanx-LCtcv We beneve mat then con;?--' 5 eacgers:ec since we nave a great deai of insurance and GA's lega1 costs anc sen:eme~!s - asbestos cases are paid c-y olr -nsurancte car- en Neverthe'ess the concern oces ex s; The boara c` directors anc -- arager-e": have as me'.' mam goal the maximizing o' share holder va'ues vverne' ov "-o- -c ;.'es ?mc earnings c ome'cvse Teats "-2 'edepiCvment programs o1 '5-3 arc 196f .vere unaenaken anc success'unv cameo ol: amc why the company s .. ii'no -a consider see o' par; 0- a1 o' the bus..ness ' : -s - me oes: nierests ct snarenoicers to ao so anc oo'-s.ster: r g- e r . : most era. eng r: ce1 c: ' : rave erre'gec a st-crce- -- ccmpar-y cete-m nee ; e; of growth a.nc acn e-.e a. oats yea's aneac By Orde-c`me 3: aro ; C -: Jesse Werner Chairman c` me Bo5 o February "6 t?S3 3 GAF 13213 Since the successful completion of GAF Corporation s major restructuring program in January 1982. the company has consolidated its chemicals and inter national operations into a single worldwide chemical organization that combines a streamlined U. S. network with marketing and service facilities in Europe. Australia, Brazil, Canada, Japan, Mexico, the Middle East and Singapore. Airless polyurethane oicycie tires using GAFs tender are tougher, more colorful than rubber Poiypiasdone* crosslinked polymers are used as binders, coatings and disintegrants by the pharmaceuticals industry Poiyciar1 AT stacwzers and eianliers help me Beverage industry produce sparkling dear beers and wines Household products pro vide effective cleaning and wetting action with GAF surfactants GAF is the cosmetic indus try s leading supplier of such polymers as Gantrez9 resins, used as film-formers m hair sprays and other hair grooming aids Results Dollars in Miii cr-s Net Sales Direct Ooeraimg P'c`:' Loss 1982 $294 4 50 1 ~' Chemicals I i Sa-es ci spec.a.fy cnervca.-s v.c'tav. ce tcra : 323-; - m.ljon ir 1962 dev. to s "d-m ' = ;: sates ol 53C0 3 million D.`e^; ooerat np drat ts of S50 1 mi'lion were ;i 5 percent ess man 12 31 profits of S56.6 m:H'On Domestic sales and eai tunes v.S'-a a'facto-b mainly py a drop in sales volume during me fourth quarter as some of GAFs major custom ers reduced year-end inventories Income also was affected by higher costs for energylabor and raw materials during 1982 while prices remained at 1981 leveis most of the year Across-the-board price increases of from five to seven percent for GAFs acetylene chemicals were implemented on January 1. 1983- Export sales of S77.6 million were slightly higher than in 1981. bul profits declined $2 4 million because of the continued strength of the U S dollar abroad. Chemicals account for nearly all foreign sales now that the company s redeploy ment program is complete and unrelated businesses in Europe. Australia and Canada have been sold. Accordingly, organizational streamlining was begun in 1981 and the chemi cals operations, domestic and international, were consolidated in 1982. Specialty chemicals manufactured at GAF plants In the United States are sold throughout the world through GAF subsidiaries and dis tributors Butanediol and tetrahydrofuran (THF) are also manufactured in Marl. West Germany, and sold in Europe by GAF-Huls Chemie. a joint venture between GAF and Chemische Werke Huls. and by the GAF international sales force In Belgium GAF manufactures a complete line of filter products for worldwide sale outside me United States GAFs Canadian and Brazilian companies now also manufacture fillers GAF is a leading producer of butanediol. an im portant intermediate chemica1 from which most of its family ol acetylene derivatives evoives THF. a solvent derived from butaneoiol. is uses in vinyl and polyurethane products, for coaling magnetic tapes and cellophanes and for making such products as shrink packaging and PVC cement Galite' PBT (polybutyiene tereohthalale) engi neering thermoplastics, also based on butanediol met increased demand as new formulations were developed for such civerse uses as electri cal connectors, automobile fence' extensions anc ice cream dispensers Tne newest of GAFs engineering resins Gallex' thermooustic polyester elastomer iTPEi superior to rubber m many abdications was introduced n Jjne Gatiex resms corro-ne neat 'esisiance loadbearing strength pius sown: anc fatigue resis tance not lound in non-po!yester elastomers GAF s Calvert City Kentucky plant manu factures PBT anc facht es there are oemc expanded lor increased Gaflex TPE p'oduction XL' cross 'inkgc pc'yv n .- a - -. p c: iPVPPi used hi pr.-'ri"-::~ :: s -a ,c XL cross- nke-.: pa.y- u r significant facte as a tat. a'a caw: - multivitamin incusm, A f=c-. ;-uc :- plasdone X_ to witn e--a- .a - -- tance was introduced for ur -- tc-p; j : Capacity was nearly ooub-cu - i. " I Jersey, for Igepon AC-76 s.trtacm- ; ' - - On tergents. soaps and cosmetics. Sa increased markedly since Igepon A tant was introduced in 1979 In Europe _ GAF of surfactants and otner speca.tv cer eals increased significantly New hairsprays based on Gantrez po-v-Ti--were introduced by the cosmetics industry " 1982 GAF, the recognized leading supr: --r- -. this market, developed iwo new Ganre; 'ey during the year for this most active segme" : the cosmetics marketplace. Anoth-e' new o:; uct. Gantrez MS-955 resin was introduced polymeric ingredient for denture adresi.es The company also brougnt out new- merrdee the Gatoard " family of radiat.cn cutab;e cc.v- mgs first marketed in 1981 The new ant-.e:. include Galgard 280 coatma speciiica1:--- de signed to increase fiexibi'ify m rues-- c...v _ and Galgard 238 otigome' fc use -r cca" such flexible substrates as bias; cs ;e>t'?u leather Gafgard uitravio'et-cured .cam- especially welcomed by me burgeo" ~.z compute-industry to protect cs'ncn-;---. . - display screens f'om be rz sere;;re.: u.-. 233 coating also is usee c- se-eefe- oa-e for television sets and to shie:c clast c ?without degrading optical ctar i-. Mineral Granules Sales of roofing granules to outs.ae custom improved over 1981 and GAF is .n an exce - position to serve the housing mejs". a? - struction continues to mc'oase n tne e tt~- .. Tne company mines a 'Suer, r.on-co'Ou; c:: rock trom :s own quarries ana prod.css ; types of neural a-c so'--.; j oe-sm . granu es st tc-ur p ants-n U 5 T-a-.- fp virf.a:d'CTc- ; y no o-.S'.u'dd' - usee bv GAr s Du.ijmg mateur. s St "to" ? 6 GAF 13216 Emulsifiers GAF- Chemical Products High-pressure Acetylene Derivatives Monomers 2-Pyror monomer tor nyion-iike linear polymer, soivem anc intermediate. soiubiii2er tor orug-aclives. V-Pyioi' comonomer ana mod^ier for adhesives, coatings fibers, etc Inter mediate Alkyl vinyl ethers monomers for copolymers, intermediates. VinyipyrroMone Polymers Polyvinylpyrrolidone (PVP) for cosmetics, adnesives oetergents coatings, pa per textile specialty uses Piasdone* pharmaceutical tapiei omoet ana coating agent Piasdone* Cexcip ient for intectaoies blood piasma expander. Pokyeta'* AT stabler lor beer. wi"e vinegar juice Polvo'asdone XL* lap'ei disiniegrant tor phar maceuticals. Garex* poiymers tor pigment cspers.on as protective comO'Os cosmetic acc* f vfeS PVP VAcocoymers m iprmers tor aor-esn.es ccs^ei'cs etc Poect'onemjis,on coDOtyme' a l "her stabilize* opacifier `o' .ar-ous uses GaiQuat coco yme's tO' skin and na r-care p'OCuCis Vinyl Ether Polymers onn;rer AN' CODO'ymprs *ot soreswe ceiergen' c*-o:ogrcr.ic text'ie ac P'Cfl'iCnS Th-c^ene' L arc -N :< oa.ms ano ore-* SvStems Gam'or 5 csn~$ to- mc: co o-v.aie* .p *, u:,co n Cf- 'oc's Ga'i'-.-c "S 1 "S I-J- CCSmcl-CC CCa *"gs pnarmaceutica's C :"l'r: U *<r> ns fld Intermediates and Solvents 0LO* solvent lor agri cultural and lithographic applications. Butanedioi intermediate lor thermoptastics. chain extender tor urethanes. Butenediol. intermediate for pharma ceutical and agnculturai chemical synthesis, Butynediol agricultural intermediate, corrosion in hibitor: M-FVof * solvent lot aromatic extraction of luoe oils, high temperature plas tics syntnesis. Methyiammes reactive chemicals tor pesticides, pharma ceuticals. detergents. NSubsi'tutec pyrroiidones lor formulating, punlymg or processing of coatings, drugs dyes, plastics, etc . Propargyi alcohol inter mediate tor agricultural and pharmaceutical chemical synthesis, corrosion mnipitor Telrahydroturan for magnetic tape coatings, re action synthesis PVC pipe cements vinyl coatings Industrial Organic and Inorganic Chemicals Surfactant Intermediates Nonyionero' Doaecyiphenoi Sodium isethionaie Sarcosine N-Metnyiiau'ne Carbonyl Iron Powders M.croscop'c size spheres containing as high as 99 5e meta'i'C iron usedm VHF and UHC Circuitry transmine's receivers raoar absorpmc compc nenis ano m powae' rT'c-inlJjrcy iron Pentacarbonyl A Iccnr.-Cd: C'-aCe befit'* I'M*- 99 S:- Cure tor ulfc r.r; s:oft'nc maieria: to: :nen, can. p-jre ,rcn flni.">cc* dOcn: lor gasc ne ?.r-2 se- tue- ca:a .s* >n ca-po^ sv,r~e?,s Specialty Chemicals Antioxidant Uvi-Nox * primary anti oxidant for polyolefins' monomer inhibitor Antistats lor Plastics Gafac * phosphate esters for PVC. poiyoielms. poly styrene Biocides Biopal KKJophors for detergent-sanitizers Corrosion Inhibitors Butoxyne* 497 for acid pickling, electroplating, specialty applications Ka lapone' W-328 corrosion inhibitor lor steel copper aluminum Also for petro leum processing drilling acidizing Lubricants Antara* extreme-pressure additives for meiaiworkinc fluids Sequestrants Cheelox* seauestratr.s cneiate trace metat im purities m text' e pro cessing leatne'dvemn pace' p*oces?mc ctanN Iiq^-iC soaps ano sham poos stabilize rubocr iatices and agncufiu'ui chemical emus-ons sp- ouester caicum -ron copper magnesium *n etc m hard water and weprocessing Textile Auxitianes Oiazooon- S 337 o.sper san: Gafe- PT pm' casx rcv'np' h.v.-pc vP ret.v.ior :or cr.c'1'; C'.CC Pnrec.1 ' CvO<ng r. n- n- stripp.-'p assistnrv. So nr-GC'-' *.* ` ' -c age **>* Lr c roc* .:~a cu vt'ppec c.ti Sufcm-ne zr 'jni'.an: arc Other Speaafty ChermcaJs Blancol' dispersant and peptizing agent tor pig ments Clays, and other souds in paper, agricultural chemicals, iatices. Gafamice* CDO-5t8 foam stabilizer for Iiquio dish washing products drycfeanmg. heavy-duty deter gents Gafgard ' radiationcurable coatings. Gaftronic * electron-beam resist ano processing chemicals for the manufacture of inte grated circuits Surfactants Nonionics Antarox* surractants lowfoaming household ana industrial detergents mulphogene- emuisiMers foaming tight- or heavyduty detergents latex stabilizers Emuiphor* dispersants emulsifiers antistats, textile lubricants Igepal* surfactants for chemica- and thermal s;aDility m textile ano oaoe' processinc hvc-'Ocarpon and acncuitura1 enemies' emu'S'-ranoo ceterge-' COmpouncnc emu.^'C" pp'vme' ZG'icr C'.z Amomcs Aupa; rvQn-ioa'T',,.-G ce le^oei'ts for I'Ousenca products siat-c centre primary emu:s-fic-it.cn Amara* iubncan*s pno ro'fOSOn mnibitcrs in o i- or wa'er-aciscc s.-svi-msG.ifoc h0'rrcnG;t .irj prriu.xii-c-r? v. I'* j".: b.'.:l-'. iuC catrnc an: jf r"J G-'-u- ' * A7 ^ Cabonics Kj*3C... ,.L r erru.iiiic-'? Iu' ni-1 -- `c. .. i a*`.J agrrCw'tJ'a. Che *. C . art.prewiuita-its anc ic> * - leveling agents amistj anc lucncam lor v.oo- an; synthetic fide p.'ocess"" GAF* engineering Plastics Thermoplastic Polyesters GaMe Gjfitc LV\* .me Gahuf DOivbJty-cnc tererthS'die fP5T rrcidir c compounds fpr au!omut..e mecnjniuj: e'ect'icu' eiect'on-c app.i*r-oe and busiest* '-c;n -r ccmpc neni? Thermoplastic Elastomer Gaffe*' iher'-pp'a-i:.^ . ester e-oStonie' *n c- oa mole ng etiMSion aCt ** ject'cn-moio nr: nraoe* fn* be e.-.? nos "d t..pi-G snem.rc tootwez-'. spo-- gj-ccs ano j-*umo: .,- GAP Filter System: GAF Mineral P'Od jets ,i-r cr rj- . Sendees 7 GAF 13217 I Building Materials The release of pent-up demand in the roofing and re-roofing markets is expected to continue as interest rates decline. Housing starts are forecast by many economists at between 1.4 and 1. 5 million in 1983. an improvement of 30 to 40 percent over 1982. Cements ano coatings help round Oul GAF Super Systems, a complete pro gram of commercial rooming products tor the building construction industry GAF glass fiber mat is used as a case for GAF s asphalt roofing shmgies and built-up roofing products Galtemp* ureihane insu lation Doaros provioe extremely high resistance to heat flow for commercial roofing Roil roofing is a part of GAF s line ot oroducts for the residential and commercial construction industries GAF produces aspnaif roofing shingles from organic and glass sub strates at plants from coast to coast. Results Debars -n M irc^s 1982 Net Saies $328.8 D,rec: ODerat'nc D"c ' ; S(26 3) Z , - - . * j.. - _ ~ .: 1 Building Materials GAF Super Systems ' cm cme-s Cm- pc "Z '0 1982 -55 we-e o' ce; ne.c ce'cw '56f e.e s o, a parcec me of cat;-: S;Sc : - - CC " 5t'-C!r3 i''C * , :C~Ce: ! vf 'r"Vc'.[| f.C5 i rr c-,ear ,vner jy.cs r'C'eases ceca^e i'a:.u'w oe as Gi: --7 , s-C Systems are a ccmc-a". . . elective roofing materia-s for cc -- -- e -r-'C - c - ' The company moves 10 rec-ce mvenior.es easy n '962 by suspending proouCi on temoc-ari:> a: construct.on ma-xetS :r V?w " - : .......- ducec Ga'g as ~S "ea-.-.v.e m- ~ -: - sneet 'o- ,,se c- a t.ces -cec 12 of GAF's 15 active ouiiamg materials piants roots with inrtmed are cocc res- ecc iTwo plants--Denver Coioraao. and Kansas sales Gafgias flashing anq new exoa.-i a- . City Missouri -- remain on maefinite furlough covers rece:vea strong qtt ai sa'es as '"eta s.nce Sepiemoer 1981 i Serv.ce to customers nationwide continued from inventories and from production at plants in Dallas Texas. South roofing accessories were put etc ra- m w cdistnbution iate .n 1S82. A-mine' new S-peSystems entry Gatgias M.nera'-Sh.eiO Bouno Brook New Jersey arc Tampa. Florida. memprane was mtrccuced ;a:er n tne . e.v By June an 12 plants wefe Sack in operation Response to date mocates that tnis new p-:.q- at reducea eveis of production to begin serv uct wi'i also gain nat ons- acceptance m '95 2 ing reneweo demana as interest rates began to come down Descte an meustry-w ce decline q =a es c' roofing insulation for ccmnerc a1 ccnst'-ct : ' I The company is offering a winter oat.ng program GAFGaftemp- u-etnane rcc* pecx -sua'C" i ti with discounts or payment deferrals on asohait roofing products purchased during the usually s ow januarv-to-Marcn period. This action is improved Ms share c-t ma-ket A :mce-eo e"; ' to mc'ease marVacticmc : r^c. a" ~c : product formula: on :c -educe 'aw --ate- a : i expected to hem control inventories ana permit costs neicec maxe tn ; e e~e-" : 2-AA uninterrupted production at plants in corner sec Svstems "-o'e ccmoet t .e v.-------.- . i tions of tne country Winter sales shcuic aisc improve as customers seek oeiiveres aheac of ottwc mate- o'caucts `982 -- Gcrs-: : Div ana Gattemp iscf-e-"- c '- Apr', price increases me company new :`*e's me ; c -- ; of co'.u'etnan-;--:c'"-q -5-:' - p . j. Although tctai saes vc:ume was owe m '982 sams o< GAF Timoerime ' and Sent.ne z ass mat sn-ngies increased Marketing eTd'ts were sen. ce ano co'trace c-cl -c - expected to oos1 GAm-w.- ntensifiec for these giass-paseo asc^a : sn r construct'd'' ''dust.-. .. . . e-. gies crooucec from supst-ate mace a' me Chester South Ca'ci ra T-c :c-::c". m ;ne e cm -3e r~a n;ams a sa ance cf g.ass-oasec a."c cca' c e-t-cased 'oot nc z'zz^z's -c 'oe: .r o.s -_s- Supply Centers r, - r ^ 'me' rec.u -emerts G'ass sa=cc rc:` "u - is Unce'-vr ters Laco'riie es C ass A v* -at -q t-S C 6CC ~ c* ci CCCJ o' 'cu'c;;'r'r'. "! ' <r j o 3'"-.,Acic);3ri; mvc- t c Z. . " I''- sootrv.e*: nanaexi GAF 13220 Prepared Roofing GAP * Building Products Prepared Pooling Asphalt Roofing Shingles Timbenme * premium asphall shingles, random butt design, earth-tone colors Timberline' Class A glass fiber shingles, tor extra safety and long life. Sen tinel * Class A glass fiber shingles, fire ano wind resistant. Standard selfsealing shingles rugged with classic square-tab de sign Fire Guard* Class A heavyweight, twin-tab sningies. Sovereign* shin gles. heavyweight twin-tab design. Tite-On* locking shingles distinctive basketweave partem. Nor easier strip shingles, no cut-outs, total double coverage Suburban* Twin-Tabs* shingles m classic squarebutt style, sweeping appearance Self-sealing Shingles Roll Roofing Smooth-surlaced roil roof ing mineral-surfaced roll rooting, combines utility and economy with tireresisting qualities and attractive colors. OubiCoverage * mineralized roll roofing provides double* thick protection Built-up Roofing Systems Roofing Membranes Air-Vent* asphalt-saturated lefts. Gatgias' flashing. Universal base sheet, organic, coated both sides lor use on asphalt roots and over poured gypsum wood fiber decks, roof in sulation. a vapor retarder lor above-decx insulation Glass Mat-based Products Gatgias* type 3 & 4 lightweight ply sheets Gatgias* asphait-coated base anc ply sheet Gatgias* mm erai-surtaced cap sheet Gatgias* Stratavenr per forated vent p*v venied giass-base leu Gatgias Siratavenr ven; pty tor nailable decks, venting g'ass-oase felt Vent Stacks Cements and Coatings Jetbian * Fiashtite* ce ment. an aspnan piasiic cement lor built-up roofing flashing. Aluminum coating reflective for smoothsurface roofs metal and masonry surfaces Mica Weatherguard* coating and Weather Coar aspnalt emuison for smooth-sur face roots Mineral-Shield- Built-up Roofing A time-proven, cotd-applied buiit-uo roofing system combining modern appli cation techniques ana specially lormuiaiec roofing products Products tncJuae Mineral-Shield * rooting membrane mastic, gran ules. ana aluminum mastic Accessories Gaflex expansion joint covers. Vent stacks to re tease moisture trapped m buill-uo roots Smgie-piy Roofing Single-ply Roofing Gatply EP ' smgie-piy root ing systems including Galply EP EPOM mem brane. neoprene Hashing bonding adhesives, seam ing cements, and sealants for adhered batiasted ana mechanically fastened roof>ng applications Insulation Products Roof Insulation Gahemp* root insulation boards Isotherm, an iso cyanurate loam board jseo where Factory Mulua1 Class i approval is requimr urethane-perlite used where high insulation effciency and fire-resistance rating is needed urethane lor use where high inerma: value is paramount Isoinerm-perlite. tor specified GAF roofing applications Monopiy. a Ipii-tacec isocyanurate foam used smgie-piy rootmo mem brane. periue to'merm.ii msuiation value and econOmy GattilC roc' msd!3 l.on fasteners tor .nax'mu'" wind upiilf res^ianro Glass Fiber Laminate Building Insulation tu, Services 6u''a:rg *i.rr . : "v dist.-ic.= buncnq _'.j;er.J..- jr-j ai` ed proju -is n GAF 13221 Research and Development Researcn and development during 1982 re sulted in new products and improved manu facturing processes for both the chemicals and building materials segments of the company Automation is being increased at GAFs roofing plants in an ongoing effort to maintain the com pany s reputation as tne most advanced manufacturer in the industry GAF s glass-cased roofing passed the Underwriters Laboratories Class A tire rating test. This is a growing factor in consumer preference, particularly in tne south and west Researcn also continues m an effort to reduce the amount of asphalt needed during manufacture, a program undertaken with match ing U S Department of Energy funds to help lessen the countrys dependence on foreign petroleum To augment GAF s broad lines o' roofing prod ucts the company introduced Gatply EP " smgle-ply roofing system based on a synthetic rubber EPDfvl Single-ply rooting is becoming an increasingly significant segment of tne com mercial roofing market New materials are in development to broaden tms product ime New specialty chemicals we-e introduced `or tne fast-growing electronics industry m 1982 mciuaing Gaftronic ' EB-46 electron beam resist that permits circuits 150 times thinner man a human nair to be etched on microelectronic chips With resolution this fine microchips can be etcned ic carry naif-micron circuits more mar oouoie tne capacity of present day mic'ocnips This oo'vme'-oased cherrvcai is coated on a meta'-piated glass mask and exposed lo electron beams etching ullra-'ine lines whereve' tne oeam touches Tne newly patented procuci is already m use by major manufacturers m-ougnout tne ncustry Dunne me year GAF coubiec saies c1 M-Pyrpr noh-naiogenatea solvent tor cieanma and slopping electronic carts ana mtroaucec seve-a new Gafgard ' coatmcs fc- computecomponents For the pet-oieum mcust-v GAF -es-.v:' developed a unidue foaming ace-1- -- -e _ solve a cosily proDierr in air-cr.lii-'c cce-a: Gafoam " AD wetting agent pe-mits mce economical recovery of Oil and natural gas high-Drine locations Hign sa;innv cest'd.-s the effectiveness of commoniv usee 'cam -g agents. Ga*oam AD wetting agent ret a ns superior foaming properties in p-ne wale- e^e' under extreme oown-hoie conditions The `oa.~ entraps pulverized materials at the dr.r bit arc moves them away from the cutting surface Tr s new biodegradable, non-toxic surfactant oresents new opportunities for the air-dmiing industry and another major chemical sDecam. market for GAF Among other chemicals developed by GAF research and develooment m 1962 are an alkoxylated surfactant for dishwasnmg oete'gents tar superior m rinsibmty to comoet-tive products Two new Biooal ` formuiators Biopai NR-l ana Biopal NR-ll toaopno-s nave been registered wun the Environmental P'cie: non Agency as sanitizers tor tne food sendee industry Both one-steD disinfectants m see; ` e strengths are effective acainst Hone Kcng u and Herpes S mpiex viruses ana can ze used acainst pactena Damoicgica1 `ung' anc as tjDe-cu.ocioes Tne company a'so introduced a patentee -e engineering resins catec Galiex mermco as tic po'yeste- eiasfcme-s i~PE. wr-;- c.-m cextrudec -niectea anc b'c.s---clcec r:- like ccmponenls to- the autcr-ot ve anc e e: t-oncs tnausmes Tnese anc cine- exa--c r.; GAFs diverse mes oi cnen-ica; o-sc-cs a-e d scussec in otne- sect o-s o' tn.s -see: GAF 13222 With gaF s newiy devel oped Gattronic'* EB46 electron oeam resist microcircuit Chios can be made with more than dou ble me capacity of presentday microchips A coating of less than i 50 000th ot an irvch of me poiymer-based chemical on a metal-plated giass mask allows electrons to etch ultra-tine circuitry with more accurate detail than possible until now Environmental The company continues to oeveiop ana upgrade modem environmental control systems at all of its locations arouno the country Major pollution control projects were completed m 1982 at the Blue Ridge Summit Pennsylvania gran ules plant tne Caivert City Kentucky cnemicals piant ano tne Minis Massachusetts Minneapolis. Minnesota and Soutn Bound Brook New Jersey, roofing plants A program of reviews ensures that GAF facilities meet tne highest standaros for employee health and safety and comply with local, state and federal regulations concerning air and water pollution control and solid and liquid waste disposal Personnel At year-end 1982 GAF employed approximately 4.500 people During tne year the company negotiated eight labor contracts five of them tor multi-year terms Contract terms compare favorably with those reported by the U S. Depart ment of Labor There were no strikes at any GAF locations, and good relations were maintained with union locals representing GAF plants GAF s forme' Salaried Employees Retirement Plan was replaced on January t 1983 Dy an mo'oved renremen: oenefus program which enminates 10-year vesting m lavor of immediate vesting m company and individual ccrtnoutions A suil nas oeen tiled Dy a *ormer employee m Feoe'ai District Court m New Jersey cnai'engmg tne ccmoanys ngr: to resicuai assets Vom the Salanec Emoiovees Retrement Par Tne com pany oe ieves tne Sw.it is without merit The new GAF Capital Accumulation Plan 'GAFCAPi taxes advantage o* recent changes in lecerai lax laws io orovoe more up-to-aate ref rerr-ent oenelits lor empicvees GAF contriteuies three percent of compensation to tne pian lor all came,oams uo to ace 65 anc emo cvees can rrae xpiunta'v 'ax-oe'errec conmcLt ons up ic to percent o' then saia' es trrouan oayro't aeduciicn Tne comoan , a-so matches twotnircs of eacn eng 0;e e^piovee s cent- option up to *ou- pe'cem o' cDmcensat-cn Uoon cancel at.on cl tne x-'me- : am ? m emcovees were vested irrv-ec ace . accruec as of Decembe'3". 's-cE E'x : e-: could elect to have an arrnu.lv .v- c- c s. the same benefits as me o-c oian a' -e ' choose to nave these oenet's ec:.e- . then new GAPCAP acco-"is cattfc . ; sums which cculc be re-mvesteo ,\ mo..: :a penalty mto Inoivoual Retirement Acre ..ms For retired anc vested employees GAF cp-tracted wnn a majO' insurance comoam ;c guarantee their retirement income WNCN GAF Broadcasting Comoanys class cai nxe < radio station WNCN-FM increased sales a-~ continued its profitability during tne yea- ~rr station enhanced its signal by nc'easmo me Dower of cs transmitter atoo the Emo re State Building Management In April Juliette M Moran vice ;na ---a" ; board o< directors retiree atter nee- . 40 .e .x as an employee of GAF Sne cmec me c ;~pany as a chemist ;n 1943 was eerec -r . := presiaeni m '967 sen or wee c-e; c;-' - anc an executive vee c'es-ce-t tr: c :?. memDerm'974 M-ss Moran ..as -e-e -1 x member ot tne ooarc m 1982 In December the comp an-, ccm p - ec x t - - - cais ang Internationa, opera: ons as cm' . - streamlining pegun tne p-e-. Cu= .e-- chem cats accountmo'c nr-' , = 34: - sates since he ccmp.et cc c :;o : - restructu- nc conso: cat cn o-c . c = - .V tive new organize: on ;'er exp-jne-nc c-w :c sales throughout me .vc'o Ca- ~ E.-w c tprme'iy senior .xe o'esx-P".: :- - coe'aicns was - = '"ec "5 sc 3r - : ~ wee cnem,;3 c cce'.v cn 13 GAF 13223 Board of Directors Officers Jesse Werner T. Roland Berner _ ' ss * c'"i _ r' i " Peter Bosshard Crec t Su.sse Augustine R. Marusi v C.na ""an Juliette M. Moran Fo'mer", V cs Cha-rme." 3 JF Ccroc-3t.cn James T. Sherwin Executive Vico President GAP Corooration Richard F. Smith Executive Vice Presiaent GAF Corporation Jesse Werner Chairman of the Board James T. Sherwin Executive Vice Presiaent Richard F. Smith Executive Vice President Robert H. Beber Senior Vice Pres,dent General Counsel ana Secretary John A. Brennan Senior Vice President Carl R. Eckardt Senior Vice President Herman Sokol Nolan B. Sommer Robert Spitzer Bernard L. Kapell Vice P'esicent ana Treasurer Raymond J. Lacroix Vice President and Contro ier Donald W. LaPalme Vice President Abraham Lindenauer vce P'es.uen; Robert F. McCarthy ce F,es,ce-'t Raymond W. Smith Vice P-es.cen: 14 gAF 13224 Management's Discussion and Analysts of Financial Condition and Results of Operations Financial Condition The companys financial co.no.t.cn ino'cvec considerably m me years lSSi ana 1982 due in large part to the successful completion cl ttie restructuring program announced a: :ne end of 1980 Tne sales of six discontinued businesses Starting with pictorial products n July 1951 provided total cash proceeds c* Si8S 5 million giving the company the cash Hows necessary to offset the adverse impact ol the severe building industry recession and allowing the company to significantly reduce its outstanding debt. Additional cash inflows of Si a 5 million will accrue fo fhe company in future years as inter est-bearing notes received Irom certain buyers are collected. The relative impact of the restructuring program on the companys financial condition can be seen in the following chart. July i December 31 Oecember 3) Millions ol Ooilars 1981 1981 1962 Total Long-term Dew Notes Payable Cash. Short-term Investments S327 5 364 (26 4? S2156 17 4 (13 31 $157 1 78 112.4) Nei Debt S337 5 S219 7 Si 52 5 Ralio ol Debt lo Debt Plus Equity 74 6t> 63 4% 47 5% As fully explained m Note 7 of Notes to Consoli dated Financial Statements, the asset mix of the pension funds was restructured in 1981 and a dedicated bond portfolio established to provide income sufficient to meet actuarially calculated payments to all retirees and vested former em ployees. including ihose o1 tne discontinued businesses Accordingly the company re versed pension liability reserves established tot employees of discontinued businesses m the aggregate amount of S43.8 million less related taxes of S7 7 million During September 1982 the Board of Directors o! the company authorized the termination of the Sa'aned Employees Reti'ement P.an (Pianj. effective December 31 1982 and the cieayon of a new GAF Capital Accumulator: Plan After the re quired government approvals are obtained the residual assets of the Plan which approximate S35 million at December 3i 1952. will revert to 'he company Tne S35 million was recognizee as an extraorenary credit n the fou'tn quarter of 1952 The company s wor^ .re car. 'a roc : c-ceascr in 1962 from f t f ic i 72 ' as can". L'acoea.generated 'rom cv.,er net ;u"en: a.:sa: z.-, s-.:c: were used fo reduce oar^ oen-ov. res n-.c't:.;nes oecreased 33=. `or me \crr as c :""q = '-;p with i98i '* the tc'a- r:er.-?:ai* f-ir related to me cu-ic.nc mate-.a,s sea ' : : a decrease o: 2:. As a -ecui: m me r ctorv levels in this segment at the eno o: ts-St a majority of fhe companys roonng pisms v.-i'e temporarily eloseo for part or at' m.r ' <: c_arter of 1982. These p ants were reopened m second quarter as a result of increased sea sonal demand The oecrease for me -ear m Accounts Fleceivable-Oiher rr.ainiv reo-ese-as the cash proceeds from the sale of me repro graphics business, whicn was so:c efieo.e ..s of December 31.1981. During 1982 the company entered mlo a S10G million revolving credit facility, replacing an agreement signed in 1981 in connection with me restructuring program Interest on the new agreement is at the prime rate or a rate based on the London Interbank Offer Rate The agree ment was tailored to meet the needs of G AF s continuing bus'nesses. specialty chemicals ana building materials. It includes restrictions on tne payment of dividends on GAF common stock capital expenditures funded deb! and sales c` accounts and notes receivable ana requires me maintenance of minimum working capita; and net worth At December 31.1982 SG3 5 miiiio1' of these funds were being utilized The cornea'-., also has additional short-term lines ol credit Capital expenditures in 1982 were 17 7 million and are expected to be about S2G mi.iron m 1983 During 1982 expenditures were a.mec s increasing capacity lor chemicals rnc.cc'"; bunding matensls plants, and neccsca:. oo \ non control programs At the enn n! m- .-c,:r company haci ccmm'imems o! S7 5 m ` - aoproved capita expend.re-. Co -- -r under various caona: ane opera:-a rs.e- cations are oetaned in Note : 5 e` Notes :r Consolioatec F.nanciai Statements 15 GAF 1^225 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations GAF 5 saies and prom pictu'e //as severely ham pered m :ne three-year per:OG of `980-1982 bv the aepressed state of me bu1 ctmg mcustry wnicn suffered 'ts vvcs: 'ecession m 36 yea's Consoiicated sa'es aeceasec ov near"/ 9S curing -ms period ana direct operating precis remamed sharply tower than '980 anc prior cesp'te a S5 8 million i32: = i increase in `982 as conoarea with 1981 Although raw materials costs easec sonewnat in 1982 inflationary materials costs during this three-year period together with the lower sales eroaed tne con solidated gross narg.ns from 22 5:= m 1980 to 1* 9G and 16 8S m 1981 and 1982 respectively Bunding materials saies tell Py tl 5G in 1982 after decreases of 53o and 6so m the previous two years pr,manly reflecting lower demand. An overall decline in voiume m 1982 was partially otlser by a sales price increase in the latter half of the year ano gene'aliy lower raw materials costs This ousiness had oeen further ham pered m 1981 oy increased costs of pelroleumreiated products and other materials and an inability to pass along cost increases. Direct operating results whicn reflected a 540o decrease in profits in 1980. showed losses of S38 6 million and S26 3 million in 1981 and 1982. respectively. The results for the building matena-s business reflect the adverse economic conditions impact ing the building industry The period 1980-1982 has been a period of high interest rates which had an increasingly negative effect on the reroofmg market, normally the ma|Or part of the companys business In addition new housing starts fell f'om i980s already depressed level ot 1 3 million units to 1 1 million units in both 1981 and 1982 As interest and mortgage rates de cline and with 1983 proiected housmg starts of 1 4 to 1 5 million the prospects tor imoroverrent m this business in 1983 a'e positive While profits `cr TP ;o --c = - , ;-p-- - = ness we'e o`f s.ic'-, '952 ccntiiuec ic 'a"-, n c" a -- c-c u 5 `"e ~ companies m oce'a: .c;~e~ a sets Th.s segment has src.-.- a -?. -- c ` assets o`25 5:26 2- S''c2~2 : stir:live., n me vears'952 '?6' =~: '262 Ope'at ng c'r'.ts ~i.s a.e'r.r.sc t s- r t saies durTQ tne same oe'co c se-me::;: this segment wn -enar s:rcnc ?.'C g'owtn and nign'etum o" r.-.estme-- years ahead Other ooe'atmg expenses ~ ; ess:S13 6 million M2'; m 1963 c.e'` 9"9 de creased in 1981 bv S2 5 m-t c~ 2'- a a decreased anotne'52 2 ~ 2: During 1982 the compan.v ccr-;-ppc - grams to reouce overhead costs y.v reductions and consoi.ca! on p: mm: cn;- a : ary freeze was also m elect c-r--u Net income in 1982 was favorably a"ec:sa proceeds from sates o` tax oene'its c. tne se tiement of two lawsuits win Eastman Kcca i by reversal of reserves reiatea to me :e-~ Salaried Emoioyees Retirement P an For a review of the effects of mtiat.cn on tne comDanys financial statements see Sues ementary Data-Financiai Reporting anc Changing Prices on page 30 Cnermca's sales and profits decreased by 2 1 = -. ana it 5o respectively in 1982 ahe1 snowing increases of 5 8 and 8 8= respectively ,r 1981 as compared with 1980 Profits were off t 1982 nainiy because of lower domestic unit -'0'une of soecatty chemicals as some of the comoanys ma|Or customers 'ecucec nveniory levels ,n the fourtn qua-te' White nte-nationai saies increased sugntiy in 1982 after aB3:; de crease m 198' profus were adversely affected r Dotn vears because cf me strength oi tie o S collar 16 GAF 13226 Review of Consolidated Financial Information Summary of Selected Financial Data income information is presented for continuing ooerations Millions of Dollars Except Per Share Amounts Year Ended Decemoe' 3i 1982 Net Customer Sates Chemical $294.4 Building Matenais 328.8 Consolidated Sales 623.2 Direct Operating Profit iLossi Chemical 50.1 Building Materials (26.3) Total 23.8 '"come iLossi from Continuing Operations Primary Earnings iLossi per Common Share--Continuing Ooerations 12.2 .64 Dividends per Common Share .50 '98' S330 3 "~1 ~ 672 5 56 6 .38 6i 18 C (28 2i t2 241 80 S23- 392 5 6 '2 52 C 13 65 " `2 3 50 -- 526- 3 4- r> rn J 52 4 25 " 42 * 25 3 1 55 ; 32 ` ~ "-- -: 4 j -" _1 ' :. The following Balance Sheet amounts oertainmg to years before 1980 have net oeen 'errec : separately loentify amounts applicable to discontinued segments See Note 2 of Ncies to Consolidated Financial Statements December 31 Current Assets Current Liabilities Working Capital Property. Plant and Equipment--Net Total Assets Notes Payable Total Long-term Debt Shareholders Equity 1982 $212.4 123.4 89.0 192.4 468.3 7.8 157.1 181.9 1981 S337.3 179.6 157 7 196 4 559 8 17 4 215 6 134 7 1980 S482 7 330.6 152 1 200 0 698 3 58 0 193.5 ' 22.3 *!9"9 S492 1 2015 290 6 303 4 333.6 1~ 6 206 4 36S 0 '5"5 i-~2 2 293 2;:"5 5 5 25 : 4,; 65 " Market For Common Stock As Of February 2. 1983. (here were 44 091 holders on record of GAFs outstandme conmen stod" T-e following information pertains to the company s common stock which is traced on the New vc. Sleek. Exchange Cash Dividends per Common Share Price Range ot Common Stock 1982 1 901 1982 First Quarter S .20 S 20 High Low First Quarter $15'/ $8s/6 Second Quarter 20 20 Second Quarter 145/a 94. Third Quarte' 05 20 Tnirc Quarter 11 ve 9 Fourth Quarter .05 20 Fourtn Quarts' 14V. 9'-. See Note o? Ncies - -- :r$J Q 3'? C " DfO-Cul S a-A-IPhli 0r a 'SC-SS'O"' cn e.'" c .. r r: t- _ - _. 5'4 5' ` 5 '; '5 '5 - 17 GAF 13227 Consolidated Statements of Income and Retained Earnings Tnousancs Of Oc -r.'b Exceo' er S^3.'0 Arnct:-".:* Vs?.'' Er/JOC Oocsrncef 3* Net Sales Costs end Expenses Cost Ct prOOwCtS SOid Distribution selling ana acvertisng Research ana development General and administrative Interest (Note 3i Total Costs and Expenses Other Income (Charges) Provision for plant shutdown costs (Note 4) Other--Net (Note 6) Total Other Income (Charges) Income (Loss) from Continuing Operations Before Income Tax Benefits Income Tax Benefits (Note 10) Income (Loss) from Continuing Operations Discontinued Segments (Note 2) Operating Income, net of income lax benefits of S466 Estimated Income (Loss) from Dispositions, net of income taxes (benefits) of $2,703 in 1982 S15.707 in 1981 and (S10.460) in 1980 Income (Loss) from Discontinued Segments Extraordinary Credits tNotes 7 & 10i Net Income (Loss) Retained Earnings, January 1 Less cash dividends: Preferred stock (St 20persharei Common stock (per share 1982-S 50 1981 -S 80 19SC-S77I Retained Earnings, December 31 1982 $623,236 518.766 69,764 6,612 43,492 20,031 658,665 _ 39,441 39,441 4.012 8,170 12,182 5.303 5,303 38,744 56,229 65,244 2,980 7,152 $111,341 Earnings per Common Share 'Note i. Primary Continuing Discontinued Exiraordmarv Ne; income iLoss FL'!y' Diluted Cort.n-j*n2 D,sco'~' r'uec Eycsc-c "C'. Net i^co^o Weighted Average Number of Common and Common Equivalent Shares Outstanding ' _ . $ .64 .37 2.70 $ 3.71 S .70 .30 2.17 $ 3.17 14,338 -' - . . * : . C-- -3 C2:r '53 :f i" 5.060. 2 644 112 -36) (33 039i J 803 128.2361 54.296 54 296 -- 26.060 53 602 5 6 :. 2 ' - c" ..... 6' 3,.: - - _ ~- . J* _ 2 1 r_ 5 * 2-6 to.::: , ... 2" ? "fr i233 4-yr - :..:= 18 GAF 13228 Consolidated Statements of Changes in Financial Position '.oar cnced Decemcer 3i iTnpusands ct Dollars' Cash and Shori-term Investments, beginning of year 1982 $ 13,348 Source tUsei of Funds Income ILossi from Continuing Operations 12.182 Charges - creditsi not affecting funds Depreciafon 20,717 Deterred income taxes (2,703) Plant snutdown costs -- Other (8.040) Total from conhnuina operations 22,156 Income (Loss) from Discontinued Segments 5,303 Charges (credits) not affecting funds (5,303) Total from discontinued segments -- Extraordinary credits 38,744 (Credits) not affecting funds (38,744) Tofal from extraordinary credits -- Total funds from operations 22,156 Cash proceeds from sales of discontinued businesses 81,976 Additions to property, plant and equipment (17,713) Other working capital items' (23,170) Other 12,487 Total source (use) before financing and investment activity 75,736 Financing and investment activity: Increase (decrease) in notes payable (9.648) Increases in long-term debt 801 Decreases in long-term debt (58,794) Cash dividends Other (10,132) 1,066 Total source (usei from financing and investment activity (76,707) Increase (decrease) in cash and short-term investments (971) Cash and Short-term Investments, end of year $ 12,377 Otner working capital item? Accounts receivable--trace Accounts receivable--other Inventories Prepaio expenses Assets of discontinued segments Accounts payable Accrued liabilities income laxes payable Ne* use 1982 S 1 743 (7 12647 413 217 1981 i960 S 2 532 S 107 948 (63 333; 3 326 144 096 160 589 (663' 5 663 (3.242) (24 477; (37 5311 (167) Si23 1 70) 126 325 H8 802: (54 8t4; 13 748) 1403 620i (15818i (4 834 i 561 S: 54 619) S11 45 986: `Cor.S'Sis pr<manly of net properly plan) ana eauipmen' uanslerrec !o assets of fliiconiinuea segments 5*rr Notes lo Consoicjlec r-f*anc:a' Siaiementa t C. 2* -3; ,;o f5 050 6 -3' 3.353 5-1 29-5 l54 29oi -- -- -- -- 3.352 107.498 (27.579) (54.619) (4.902) 23.750 (40.541. 74.282 (52.2501 (14.4251 597 132.337- (8 567] S 13 348 |.-r: i != -- --- - 3" 39' (343 33r 262 4-.; 1 C T" -- -- 45 54 11 92C (46.154 1145.985 124 44 : (11 224 40.329 8 44- (21.294(14.00" 603 14 33 2 35 ~ 5 2' :-2: 19 01 -o.jotu'b Consolidated Balance Sheets December 31 (Thousands of Dollars; Assets Current Assets Cash Short-term investments Accounts receivable--trade less allowance (or doubtful accounts--1982. S3.034: 1981. S2.828 Accounts receivable--other (Note 2) Inventories--net Finished goods Work in process Raw materials and supplies Total Inventories Prepaid expenses Assets of discontinued segments, at estimated net realizable value (Note 2) Total Current Assets Property, Plant and Equipment, at cost (Note 15) Land and land improvements Buildings and building equipment Machinery and equipment Construction in progress Total Property, Plant and Equipment Less accumulated depreciation Properly, Plant and Equipment--Net Other Assets (Notes 1,2 & 7) Total Assets See Notes to Consolidated Financial Staiemenis 1982 196' $ 9,113 3,264 74,744 13,206 48.346 15,819 34,680 98,845 4,589 8,652 212,413 5 10 355 2 963 76 106 70 014 87 169 24 121 36.42S 147.716 4.806 23.272 337.264 16,330 60,452 227,742 9,217 313,741 121,321 192,420 63,499 $468,332 15.941 60.780 225.333 11.091 313,145 116.735 196410 26 066 S559.760 20 GAF 13229 DeceTicer3' Tnousancs of Dollars. Liabilities and Shareholders' Equity Current Liabilities Notes pavabie iNote K; Cjrrent portion Of long-term deDi iNote 14: Accounts payable Accrued liaoilit.es iNote 2i Income faxes pavabie Total Current Liabilities Long-term Debt Less Current Portion [Note 14i Other Liabilities iNote 2i Total Liabilities Commitments and Contingent Liabilities (Note i5i Shareholders' Equity (Notes 12 13 & 14) Preferred stock Si par value, authorized 6.000 000 shares. SI .20 convertible series issued--1982 2.554.757 shares 1981 2.611 784 shares, at assigned value of 51.25 per share (liquidation value 1982. S68 155) Common stock. Si par value authorized 25.000,000 shares: issued--1982. 14.459.004 shares: 1981 14 387.721 shares Additional paid-in capital Retained earnings Total Less stock held in treasury, at cost Preferred--76.400 shares in 1982 and 1981 Common--1982. 144 747 shares: 1981.211 467 shares Total Shareholders' Equity Total Liabilities and Shareholders' Equity See No?es 10 Consoiioaieo financa1 Staienne.nts 1982 $ 7.800 34.587 50.753 28.834 1.392 123.366 122.489 40.558 286.413 -= _ r `c :. _ - =---- 3.194 14,459 55,008 111.341 184,002 932 1,151 181.919 $468,332 65 244 -3- 931 l o3S 34 6f~ - 21 GAF 13230 Notes to Consolidated Financial Statements I 1. Summary ol Significant Accounting Policies Principles of Consolidation The accounts ol all subsidiaries o! the company are included in the consolidated financial state ments All significant intercompany transactions and balances have oeen eliminated. A wnofiy owned captive insurance subsidiary and the 50o ownership of a foreign chemical manufac turing company are accounted for oy the equity method. Short-term Investments Short-term investments are valued at cost, which approximates market. Inventories Inventories are valued at the lower of cost (principally average) or market. Property, Plant and Equipment, and Related Depreciation Depreciation is computed principally on the straight-line method based on the estimated economic lives of the assets. Certain interest charges are capitalized as part of the cost of property, plant and equipment additions. See Note 3. Deferred Income Taxes Deferred income taxes arise trom reporting cer tain income and expense items in the financial statements in periods different from those in which such amounts are reported tor income tax purposes Investment Tax Credits The company accounts for investment lax credits arising since January 1. 1971, as a reduc tion of the provision tor United States income tax (the flow-through method) Investment tax credits which arose prior to that date were de terred and amortized over the estimated service lives of the related assets. Sale of Tax Benefits The company accounts for the proceeds trom the sale of tax benefits (i e . investment tax cred its and depreciation deductions) pursuant to the leasing provisions ot the Economic Recovery Tax Act ot 1981 as pre-tax income. See Note 6 Retirement Plans The company and its subsidiaries have retire ment pians covering substantially a!' employees The company s policy is to accrue as expense a.n amount computed by the actuary and to fund at least the minimum amount required by ERISA See Note 7 Earnings per Common Share Primary earnings per common snare are com puted by dividing .ncome (tossi aciuslea tor preferred stock d.videna requirements by the weighted average numoer ol snares ol common stock outstanding curing the vc-ar The comcuta lion assumes me exerose c; outstanding stc;opr.ons to the extent they are dilute e. Fully diluted earnings per common snare are computed on the assumption i.vrere rne thereof would ce dilutive i mat convert,pie se curities outstanding had been convertec mic shares of common stock Aopropnate adjust ments for dividends or preferred stock ano interest on convertible notes met ot appiicace income tax effect) are made to earnings appt cc ble to common stock for assumed conversions The computation also assumes the exercise c all dilutive stock options Cost in Excess of Net Assets Acquired Cost in excess of net assets acquired in the amount of S5.744.000 is included in Ofher Assets in the accompanying Consolidated Balance Sheets 2. Discontinued Segments In 1980 the company discontinued a number or businesses including its reprographics, photo graphic graphic arts producls. pictorial products resilient flooring and certain other businesses The pictorial products, graphic arts, resilient flooring, vinyl siding and paDer and miliooara businesses were sold in 1981 The repro graphics business was sold on January 8. 1932 effective as ot December 31. 1981. which substantially completed the discontinuance program. A receivable of S63.9 million relating I; this sale is included in Accounts ReceivableOther at December 31.1981 Long-term notes receivable ot S12.6 million and S14 5 million re lating to the sales of discontinued businesses are included in Other Assets at December 31 1982 and 1981. respectively As ol December 31. 1980. a provision of S25~ million (5244 2 million alter tax benefits of 5'2 2 million) was recorded and consisted cl a rose-. - tor the loss on disposition ot assets and a lia bility lor anticipated phase-out costs This reserve and liability were reevaluated in I98f connection with the sales of these businesses and determined to be more than needed to cover anticipated costs The excess ol S43 6 million (alter taxes ot S6 5 milliom was restore" to Estimated Income (Lossi from Dispositions ; disconiinued segments Estimated Income (Loss) fiom Dispositions lor 1951 also mciucer S10 7 million income (after taxes c 39 2 m.: consisting primarily of pension reserves re a- - -. to 1977 discontinuances no once' recu iec Estimated Income (Loss', com D soos i.c-s : 1982 nel ol laxes includes me re.ersal ot a 2" - mil.ion reserve Hess a related tax oe"er'i u' 22 million) for royalties estaC'shed r-gr: - is no longer required as a ro-sui' s' in-? cs-'i.;- - of an Eastman Kodar, patent sun aoamsi re- company 22 GAP 13231 Activity in [he discontinued reserve and uao-niy is summarized oeid'.v M.: tor s o! Oo.'a.-s Rcse-ve or LOSS On DfSbos'tic'i C' UaLil'tv loi Phase-Out Cv-:,5 Tcr.r Provision 'ecorcec <n t 980 Activity Cur ng 1 950 5'37 c it 3, ST" " ^6 0. " 0 Balance DccemBe'31 1980 i36 j 121 7 247 7 Activity Cur.ng 1 98 1 Adjustment oi ba ance m-: 3i 66 (30 3, (144 Si .'56 71 150 it Balance. December 31 I98t 183 34 7 53 0 Activity during 1 9S2 |5 6; (14 1) ny ri Balance December 31 1982 S 12.7 S 20 6 S 33 3 At December 31. 1982. Ihe current portion ol the liability for phase-out costs is S2.3 million and is included in Accrued Liabilities the noncurrenl portion ol S18.3 million is included in Otner Liabilities. Comparable current and long-term amounts at December 31.1981 were S15.1 mil lion and S19.6 million, respectively Operating Income of the discontinued segments tor 1980 shows the results prior to the effective dates of the discontinuances Operating results subsequent to the effective dates of the discon tinuances have been charged to the liability for phase-out costs. Sales in 1980 applicable to discontinued businesses were S553 4 million prior to the dates at which they were reported as discontinued Assets of discontinued segments are summarized below December 3i (Millions ol Do'tars) Accounts Receivable --Net Inventories Property Plant & Equiomenl --Net Other Tota1 Assets Less reserve tor loss on aispcsuion o' assets Tota< Assets at Estunaiec Ne' Realizable Va;ue 1982 5 39 03 ip i 1t 21 4 i~ - c c * i96t sn 8 it: 2e 41 c it : 37-: 3 3. Interest Expense Imeresl expense lor continuing operalions lor the years ended December 31 1982 198la.no 1980 was as follows Tnousnncs of Do'iuis For tho Year 7o:a 'mcmC L-rSS '"io'nct c'tr-'n: zee T-:rr "7 3 -6 53: T ' l.t. 574 70 : C--; 5 Foreign Exchange Pre-tax to'e-cn exc".v ,_.e u. contmu-nc cpcrat-drs? Income iChames as to v.vs Fc- 1`urs j; Fo'v.jfc e'C'iu'i' ct .v.-` >; rbvable 'r^ci^Vvr Tplo- Trans-at'O'' Forward evcnanrv (`'nrr.-cb. Payable 'ccov.to.c Total The company, as requirec .vui acopt me St.-vment of Financial Accounting Slanca'cs Mo "Foreign Currency Translation effective as c` January 1.1983 It the company hoc acopiec this Statement in 1982. earnings `or me ve:-.would not have been at'ectec sianil.con: v 6. Other Income (Charges) A summary of Other Income iChame -- Otnc-for the years endea December 3V i?S2 '9S' and 1980 follows Thousancs 0? DoN.v* For me Vcnr Cash setfCTien: o* 201 n^c; lawsuit witn Eastman Saies of tax benefits Reversal ol pennon I see Note 7 income ness! trcm ecu.:. metnoc investments loierest income Aousunen: of se*t insurance "esc-mc:- Fore-Qf. excr-ar.ee oa m (See Note 5 Omo' --net To-a - 5 7. Retirement Plans in June 1981 me com:..-:: - me asset m > !-- . .. as a result ol tne rebi-i. ' c : . j : - cated bond po-ilci o r,r.,y rated return ol 129 wv .; - o- - . ; -- - yield to matur.'y on l1 m : `c- lisnod to p'o-.- - actua'.a!!\ c2:cL- ;-.;e.' - : ana vc-siez `c-'-c ol me- discern- -. ...- - c i.me tnc ccmc.-.n . -' assuinec re1-:- `. Plant Shuldown Ccsls fne comps-v -r. Decembtr* >% piuvictco 5'3 f mi'hon fc: cerm r *eh "i 11 sm/cc-vcs p'lmr-.'-i.-. me r,:c-cf o` re'aic-d 2u:..n m;. mi; -.:r . . . m c> - . 23 GAF 13232 Notes to Consolidated Financial Statements Phase-out costs accrued in connection with the 1977 and 1980 discontinuance programs included amounts for future pension costs tor which the remaining aggregate liability was 543.842.000 at December 31. 1980 The com pany is no longer obligated to fund any benefits relating thereto and. accordingly, the S43.842.000 balance, less related taxes of S7.747.000. was restored to Discontinued Segments--Estimated Income (Loss) from Dispositions during 1981, or S2 56 Primary--Discontinued Earnings per Common Share. During September 1982 the Board of Directors of the company authorized the termination of its Salaried Employees Retirement Plan (Plan), a defined benefit plan, effective December 31. 1982. and the creation of a new GAF Capital Accumulation Plan, a defined contribution plan, for eligible salaried employees effective January 1.1983. Approvals of the termination were re quested from the Internal Revenue Service (IRS) and from the Pension Benefit Guaranty Corporation (PBGC) during November 1982. An annuity contract approximating S100 million, representing the present value of the accumu lated benefits of all Plan participants and their beneficiaries, was purchased from a ma/or insurance company by the Plan s Trust Fund in November 1982. After receipt of the required approvals from the PBGC and the IRS, distributions will be made to all Plan participants and their beneficiaries on the basis of their individual payment options selected, and the residual assets, which approx imate S35 million at December 31.1982. will revert to the company The S35 million of residual assets has been recognized as an extraordinary credit, as to which no tax effect is required because of the availability of loss carry forwards for income tax purposes m the Con solidated Statement of Income for the year 1982 or 52.44 Primary-- Extraordinary Earnings per Common Share, and is included m Olher Assets in the Consolidated Balance Sheet at December 3! 1982 The retirement plans for hourly employees and tor Texas City facility employees continue in force for eligible employees Pension cost lor continuing operations was S873 000 in 1982. S2.347.000 in 1981 and 59.806.000 m 1980 Resulls o' operations for 1932 include a 57 000 000 credit in Ot.ner Income iChargesi representing tne reversal of reserves related to the Salaoed Employees Retirement Plan which are no longer requires as a consequence ol the company s Seotemoer '982 decision to termi nate sucn retirement plan isee Note 6i A comparison of the accumulated plan benefits and plan net assets for the companys domestic defined benefit plans is presented below Thousands of Oonars Actuarial present value oi accumulated pian oenefits Vested Non-Vested 1962 198 *' -.953 St 79 582 S167.245 S22l i 5' 7 057 6 764 10 305 Total St96 639 Si74 029 S231 4c- Plan assets avaiiaoie tor benefits S206 564 S2I7 395 Si 73 05 ' Assumed rate ol return Plan valuation date 7s j 1 1 82 1 1 0i o;. i 1 85 'Certain amounts for 1981 and 1980 have been resided to exclude from accumulated plan beneMs anc plan assets available lor benefits loose allocated annuiiv contracts nee by insurance companies, in accordance wiin the p-ovisions ol me Statement oI Frnancial Accounting Slandaras No 35 "Accounting and Reporting by Defined Benefit Pension Plans 8. Schedule of Business Segments' Millions ol Dollars Year Enoed December 3 1 1982 198i i9ec Sales Chemical Less miersegmen: sates" S310 5 S325.4 S306 2 16 i 24 6 23 6 Net Cnemicai Building Materials 294 4 328 8 300 8 371 7 284 4 392 5 Consolidated Sales $523 2 S672 5 S677 2 Direcl Operating Profit (Loss) Chemical Building Materials S 50 1 S 56 6 S 52 C (26 3i (30 6) 13 " Total 23 0 10 0 65 Corporate Operating Exoenses Interes' Other Income--Net (30.21 {20 Cl 30 4 (32 21 (19 21 04 (37 9 (21 6 22 Net Corporate Expenses 119 9i i5i 0i (56 6 Income (LOSS! from Continuing Operations Before income Tax BeneMs S 40 Idennl.aoie Assets Chemical 8uiiding Materials Corpoiate Assets of Disconnnuec Segments S196 4 176 8 66 4 S7 Total Assets S468 3 Additions to Property. Plant and Equipment . Chemical Building Maiena'S Corporate S 79' 0? S [33 0i S 9 S23C6 222 4 113 5 S190 c - 41 * 23 3 . 265 : 5559 8 S695 5 S '2 2 14 0 14 S 2* 9 23 { 2_ Total s : r 5 27 6 5 45 Depreciat'd.' Che-i.cc Bu'idtnc Maic-'ia s CO'POf Jf .* s !; :2 l9 S 96 a: '5 C. P - - To;j. i 20 ` 5 - i ' " Staiemr-i; income irt'j-n.T' yi S ted : Jr :u* OD.-.'rV'O'-S lrvCfGOg''Vi' brf'r jre 'e*. i'' l'\ : V - 4 : . :c ud,ll'ii,-ti._ 3 -., in'.-'-,. . 'a ; - i........ - - rnoiir..'1's sr tn-ri v.e- 24 GAF 13233 9. Geographic Information' information with respect to operations Dy geoaraphic area is as 'clows M, crsc*Do>a'S For me reaf 982 Sa es t-ess r,ie':eoG'2C"; *3*?: Sa e$ to unan. iatez Z^s'z-e'i, Oec: Operating ^'om Ne' Corporate z ^censes irrc^ne t'om Operations 5ero'e ir'co<T'e Ta* 5ene* $ ioeni /iaD'e Assets jn,;ec S'ates 5563 3 25 4 557 4 O4 '.vasterEw'CPe 55'; 48 2 c9 Dme- 5 "J 1" 5 35 425 7 22 4 '0 5 ~ ~C ;*; 2 -; t -- 6* r --:.. -4 7 . 98i Sates Less in;ergeograDr"C sa'es'' Saies tc Onaff natec Customers Direct Operating Protit ^et Corporate Expenses income t Lossi Irpm Com numc Operations Before income Tax Benefits identtliaoie Assets S63S 3 26 4 608 9 6l 5 48 0 08 47 2 80 5 '64 - '6 J 3' 502 5 24 2 98 2" 2 -- -- 23 2`1 ' -- 6" 2 - ': - jt 5599 i960 Sates Less miergeograonic sales' * Sates to Unattmateo Customers S636 7 29 5 607 1 S 67 5 12J 55 1 S 15 0 -- 150 5.42 0. .42 0 -- S6~"2 -- 67" 2 Direct Operating Prof t Net Coroorate Expenses 510 12 5 22 -- 65 56 c' income from Conrnumg Operations Before income Tax Benefits loentifiaoie Assets 396 0 28 8 3* 73 265 '' 696 2 'Geograpnic information is presented tor continuing operations for information pertaining to me Statements o' mco'ne 'tntergeograonic sa es are recorded at prices aoove cost, as negotiated Detween me operating urits `Assets of discontinued segments at estimated net reanzaoie value 10. Income Taxes income (Loss) from Continuing Operations Be fore Income Tax Benefits consists ol domestic and foreign income (lossi as follows Tnousancs of Donars For the Year Domestic core<on income iLosS- from Continuing Operations Before income Tax Benefits 1982 1981 1980 SM9S5' S.44 053. S.5 572' 8 99"' 1*014 14 643 S 4 0 r 2 5:33 029> S 9 07" The income tax benefit (provision! on continuing operations consists of the following Tnousancs of Do ;ars For me year '982 198' Untiec States --c.mem umtec States --oe'er'ec SiO~DC $ -- 2 10 557 Unitec States mvesimem tax ctec'ts -- Foreign -- curren ` -89> 5 554. Foreign --cnarge in -ieu of 'aes 3 ~4a. State -- mcome Ta Be^e'cs S S ' '3 3 J 5C2 1980 57 243 4 590. 5m 5 395' S' 246 Income tax benefits (provisioni or continuing operations tor the years 1982 1981 and i960 were different from the amounts comouted by apolymg the United States Feoera1 statutory income tax rate to income i lossi be!ore (axes Tnousancs ol Donafs For tne Year Tax Dene'.' `.provision' Ad ustmenis Operating toss ca-r.pacCarryforward un^ec Stares nvesmnen: 'ax creo;:s Domestic miemancna1 Sa.es Corporation ano oeptet'Or-' allowances CtQro.gr' Cpe,3tiC''S Omer -- oe' inccn-.e 7a* Bene1 *s '962 *95' 5438 '055 5"' 5 3 -o i j ' 95 : .-4 25 GAF 13234 Nates to Consolidated Financial Statements Tne beneat ( d'ovisio'-!i "or uniiec Steles oeler.-ea income taxes aopi'csp.e to contmu no operations is summarizea as !o. ows 7r'f.,isa"CS 01 Ou orb Fc "ny tvrr "i'3i "S3' 1-3-' Rcver$di C-: la chccr d ce"3irt 1 &7~'GSrfve? Ta< aepreoat'on over arnoem reoorieo in Consonaa'ec Statements cr income Imeresi expense cap'ty:uen Foreicn exenanoe transralror, Oiner --ner S 0 733 -- -- -- -- 7 r '4" -- -- -- 1510 S-- icOOSr' 2S 5. 139, .330 TotalS_2 733 S'0S57 S-- 590. For income tax reporting purposes. Operating loss carryforwards of approximately S100 million are available at December 31.1982. of which S90 million is available for offset against future United States taxable income through 1996 The remainder is applicable to consolidated subsidi aries located principally in Western Europe and will expire at various dates through 1992 In ad dition. United States investment tax credit carryforwards of approximately S9 million are available as of December 31.1982 for offset against future United Stales tax liabilities through 1995. Provision has not been made for United States income taxes on unremitted earnings ol S16.236.000 ol consolidated foreign subsidi aries as of December 31.1982. since it is man agement s intention to reinvest such earnings indefinitely Any United States taxes payaOle on foreign earnings which may be remitted in the future are expected to be suostantially reducec by the combined effects of a net operating loss carryforward and foreign tax credits. Unitec States income taxes nave not been provided on the unremitiea earnings ol S14 220 000 of tne Domestic International Sales Corporation suDsidiary through December 31 1S82 since the company intends to postpone maetimtely the remittance of such earnings Extraordinary credits for 1982 include S3 74-1 000 representing the income tax oene'it Iron the uti lization ol foreign operating loss carrytorwarcs Future utilization ol the operating loss carryfo'wards tor United Stales income tax purposes may require me restoration of aponcao:e oe'errea income fax leserves 12 C3P'ial Since OP .VO'C'" C-.re r. r = T !,,re,n`ccc,v|^0'i t-:-;;* 0" - 9 ' Transactions *r conrir were as tclicws Tne-sar-ci D-. "r Ba.<ince Ja-iuv, ftcourcnase O' 05.C/Z? m 1932 105 lGC s'.j'er. ^ l98i anc 10 500 fend**?: 19B0 pursuan: io trie srrictec sloe* ojrcr-ase yj1' Issuance ifQm treasury o* 132 279 shares n 1932 130.520 shares m 1981 ,-n; 97 500 snares m i98u im connecnon w>m sales one-"' the siock oo'ion Diai anc f^e restrictea sioc*. purchase plan> Balance Decenper^i As a result ot the above issuance of heasut > shares, additional paid-in capita1 'ncreasec S580.000 and S276.000 in 1932 anc tSc i respectively, anc decreasec Si 23.030 n 1920 The shares of common stock rese-.-ec 'c ss.. ance at December 3l '952 anc 1951 .verc a; follows Ftc-se-veo 'o' Co'-veision o` 3 311 convert '.y.e '.no; z CG-xy-x G-' c` c r.-'vo-.r e During 1982 57.027 sham; c .-'CV'vi ass'gned value o'S7t.234 .'.an- cc - .y;3 . 7t 233 shares ol ccmmo'i stccs c,.-- - ; : ro ' 456 417 shares ol O'e'9'rec stoc-. .--a: vaiue o`S570.521 .vem cor.-. c:e~. .rac ; 7` shares of common stoc-, arc n~9 j I 37 47,5 sna-es ct preieneo stoc- xame cl $46 S-tO we'e co". .c-"9 a, . shareu c co'-'cxn step. 11 Supplementary Financial Inlormalion The following expenses of contmu n.g poc-raticn3 are includes m tne Ccnso: dated Statement; C Income Tarc- c C.0 ~t~. 13 Stack Option ar.d Siock Pcrca.ts; s'zr; man'CO: or tne ;n . ' tram untie' me ; .- gap 26 date me e-c-cisab o o.-,-; .= .. cxp.re dir; K} yOn't. T .= p . . _ noide: no., redv.es: su'-e-ncc-' o' me cr.'icn .i Jc *1" 2ct ``I 1 - ' 7 AS'' C: ^>',CZr. C\ i'*rr 2' ;>? 5 "`?'i^Cr ;; c- cpion ::'c ir = -~'9' or,055 0" v'.a;e 0! Sucre.' CO' T"io M'puesied So.'re.~!0er o' a'-. oli; on De U. Ceot and Ctviasr.c Testr.-cticn' .eel 5 " 9s-s-1>S PS rpi ~ ps-i'i a-so crov ces o' :ro ?:oc-. aC~rCKi!.on 191*15 Dt?rm<:tinc :ne coi.on n nicer *0 jurrencor exe-c.sable options m me even: o> a tender or exchange offer for the corporations common sto-Cx mace by someone ome' than me corporation. Authority to grant options ur.aer the 1965 dual.fieo plan expired on March 31 1975 Options granted under this plan expired live years from tne cate of grant Transactions affecting options unaer these plans are as follows Ouistanomg January *. 1980 GranJeO c*erc'sea TefrrunateO Outsianamg DecemOer 3 \ 1980 Granted Exeictseo Terminated Outsianamg December 3' t 98' Granted Exercised Terminated Outstanding Decemper J*. 1992 Njmoc' Average of Snores Option Price 618 670 SI0 48 132 000 (22.500) (US 500) 11 50 10 28 9 87 612 670 10 82 99 000 i76 0201 161 50Ct 14 68 10 6u 12 27 57u 150 _ 1133 OOOt (36 5001 40-: 650 11 39 _ 10 96 12 3B 1 1 44 Of the tota; notions outstanding at December 31. 1982 1981 and 1980. 404.650 488.650 and 480 670 respectively were exercisable Options fo' 118 50C 82 000 anc 119 500 shares were available for gram at December 3t 1962. 19S1 and 1980 respectively Unde' the provisions of the company s 1S69 restricted ana unrestnciea stock purchase plan 650 000 shares o! common stock were author ized tor sale to key employees The plan currently proviaes tnat restricted and unrestricted shares may oe sold at prices wnich are not less than. SOS and 80 = , respectively ot the dosinq mar ket price prececmg me date ot aran; Unde' certain conditions the compsm has the riant to reourcnase restricted snares of ccmmrn slock at me or g nat sol na price Tne excess of cuotec nar-.e: value at me cate c - a - over the coa'cce.'-:- sales pace tor re st- ctec sn.ves sec a --o" sec r.; charges to income ove- the restricted period As a resu-t c mese C'd'oes ncc t.onat naio- n capon, r.ai oemt ncieasc-c 68 930 108 0C0 anc s'?e DCC n "er.C I 95! and i960 respec t ve Tre Paian-Ce : j DC- amort zee through '959 amo.m'-c-n p a35 309 3902 0C0 anc si '63 000 ai Decembe- 3: '962 tSSt and 19b0 respective > 27 .`.Ux-'-m.-i incc-iy- uesi ojtS'arv:i-'.,-: a- s~.'. ic-'r v-- Averaca -nicr.-"-.- sue The average amount outstanding for re vea' was computed by dividing the total o' the nvm end outstanding principal balances ov 12 Tr.e average interest rate tor tne yea> was compute.: using the weighted average interest rate o" outstanding balances at each momn-enc At December 3J. 1982. GAP hao unused snortterm lines ot credit aggregating approximate v S21.4 million tin addition to the revolving cred't facility discussed below). Tnese lines of oec; are maintained with banks on terms general, renewable, expiring on various dates Sorrow ings generally bear interest at or nea- me prime commercial lending rate or a rate basc-c on the London Interbank Offer Rale Long-term debt at December 31 1932 ana 196` was as follows Thousands ot Denars 9 --n senior notes aue March 31 1 597 Attn anrujl vCtte'JuieC Dn-'Cipji repayments PevoMrvj credit aut-emer; i itr betas' e 6 Srf'tOf rtoies Cue-Jcinii.'.'. `9^2 .von annua scr.c?.-:"fC pr.'-ctpa* feoavmo'';c ra>-">*e,r,0( t^fi:':*-a m'.or l io~ 5 i.. _ Of-S :D ZC`"j~ Ce-tjin sc;; ire ''cren as cc `ute'd1 h* Cr.'Q.irtons uncer .t?asc- 'see ui^ ' j b' ccn-.Mt' di* b^po-omateC no;--c CueAyn. * 133-1 *.tn ootiar.v 3'T'ud: tva-nr.-w: A-- . : 990 OtMf ; o:^s> An,C" - er v<V V-> ann '"Ti'iT.-' -I' GAF 13236 Notes to Consolidated Financial Statements Tne 5% convertible subcromatec noies are con vertible into shares ot common stock at any time at a conversion price ot S22 50 per snare ;suoject to antidilution adjustments in specified circumstances: Tne company during 1982 entered into a SlOO million revoiving credit taculy witn a consortium of ten banks, effective as of June 30 1982 ana terminating January 31 1984 Interest on me funds is at the prime rate or a rate based on the London Interbank Offer Rate The new agree ment replaces one signed in February 1981 in connection with the restructuring program which was substantially completeo in 1982 Under the agreement a commitment tee of'; of 1% per annum >s charged on tne daily average unusec portion ot the commitments, and a facility fee of ' 2 of lo per annum is charged on the commit ments. whether used or unused The new agreement includes restrictions on tne payment of cash dividends on GAF common stock (dividend covenants in other loan agree ments are less restrictive), generally based upon fifty percent (50%) of the net income (excluding certain special items) subsequent to tne second Quarter 1982 less all cash dividends paid since June 30. 1982. At December 31. 1982. available income, as defined, was in a deficit position restricting the payment of cash dividends on common stock. Consent to payment of the February 20. 1983 dividend was obtained from the requisite number ot lenders Until available income, as defined, becomes sufficient, cash dividends on GAF common stock cannot be paid without further consent Dividends on GAF preferred stock and stock dividends on common stock are not restricted. The agreement and other loan agreements contain provisions which, among other things require the mainte nance of minimum working capital and net worth ana limit the amount of debt Cash requirements to meet maturing long-term deDt obligations over the next live vears are oresented below Debt of S33 5 millior mcur'ea unoer the revolving credit agreement has been included in the 1984 amount Oaseo upon its term 1983 1984 1985 1986 1987 S34 567 000 S45.034 000 S10 302 000 S10 028 000 512 757 OOC 15. Commitments and Contingent Liabilities The company ras a ease'C is s:m - ' . e neacooariers n wav-ne hi . w- c~ s `or as a capital ease Tms ease s -c .Pro m Property Plant anc Eo^cme-' -- \e' December 31 ' 932 arc i Sc! " : re S3 427 300 anc So Sc~ OOC `esoe;:-e - * present vaiue c 'ufure re: m m--,,.r- ess-: p -. menis is refiecteo as icng-te'm cec: .See - 141 Tr.e amortization expense ass:; e/ec m this caoitai lease is iro,,ceo m oeore; a; c" exoen.se The company aisc nas see-?.: -c leases for transportation arc data c-: :es s " eouipment anc tor other cuncmcs Future minimum lease pay menu 'c p-cc = a; used in continuing operations .v cn 3-5 -e under long-term noncanceiabie eases as ; December 31.1982 are as follows Tnousar.es of Oc la's Minimum Pa/mer-s 1983 !98-i 1985 '986 198" Later Vears Totat minimum payments Less interest mciuaea aoove Present .-a.ue oi net minimum tease cavments S ' 1 635 ' r-' `' 9 -iC~ ' 5C' ~ :. - - _ . s f -: S' ' 90r The company had commitments ol aoorox matelyS7.292.000 at December 31 '982 termacquisition of property piart and equiomen; 'c its continuing operations At DecemPer 3' 1982 there were va'iOLS pend ing lawsuits ana claims against me company relating to mailers arising from its business rcluomg approximately 12.000 cases mvc v~g claims reiatmg to the exposure to asbestos casbestos-containing orocuc: soioovtreccm. pany For me asbestos cases 'he com,can, s being detenced and moemnifiec py -ts msu-a- :: carriers subject to a reservation o`c.nis In--a oomion ot management, the ultimate cisocs ot suen matte's win not nave a material ac ,e-se effect on tne company s consoiicatec Ima.nc.a position 28 GAF 13237 Auditors' Opinion Deloltte HaskinsSells One World Trade Center NewYorn NY 10043 To The Shareholders and Board of Directors of GAP Corporation. We have examined the consolidated balance sheets of GAF Corporation and its consolidated subsidiaries as of December 3i. 1982 and 1981 and me related consolidated statements of in come ana retained earnings and of changes in financial position for each of the three years in the period ended December 31 1982. Our examina tions were made in accordance with generally accepted auditing standards and. accordingly, included such tests ot the accounting records and sucn other auditing procedures as we con sidered necessary in the circumstances In our opinion, such consolidated financial state ments present fairly the financial position of the companies at December 31 1982 and 1981 and the results ot their operations and the changes in their financial position for each of the three years in the penod ended December 31.1982. in con formity with generally accepted accounting principles consistently applied Qjdc^Cti kloodLm. February 15. 1983 29 GAF 13238 Supplementary Data (Unaudited) Fmstcial Reporting pm! Changing Prices Accounting St.-nu-'CS To 32 -osnc.u Reporting and Chanc.nc Pr-ces the 'Cro.'.mc supp'ementa'y inlon-nano0 s u:e;,~-'C'..j 10 re'iec: :ne estreated m'po:: ,3 . I o.` incrt-e companvs income Tcrv. com ro no cporaiiuns The company s mstcncai cos; `.naooa cs'a have been adjusted for tine effects of genera1 inflation on inventories and property c.ant ano eauipmer,; (constant collar bas-si and 'zir ihe efrects of changes in specie prices on loose assets (current cost Dasis - As a result tne im pact on nel income only reflects ac.iustmenis to depreciation expense ana cost of products sold Sales and other costs and expenses including income taxes, have not been adjusted The management of GAF cautions the reader m interpreting this supplementary data due lo the required use of numerous assumptions and estimates in preparing the information This data is therefore only an indicator of the effects of inflation and does not provide a precise measurement. Constant Dollar Information Constant dollar accounting is a method ol re porting financial data in dollars having an equal (i.e. constant) general purchasing power As required, this information has seen compiled by adjusting the historical cosls of inventories and property, plant and eouipmenl for changes in the Consumer Price Index tor All Urban Consumers Current Cost Information The current cost method adjusts historical costs of the companys inventories ana p'Operly plan! and equipmenl to reflect changes m specific prices (current cost) of producing those same inventories or replacing me assets at tne bal ance sheet dale Plant and eauipmen: current costs were estimated by aaiustmg hislouca; costs by externally generatec inouslnal price indexes. Inventory cosls were developed us ne current manufacturing costs. Inventory costs included in the Cost of Products Sold were determined on average current costs during Ihe year Under both methods depreciation ex pense was adjusted based on the restated asset values using the same estnnaied uselui nves and depreciation rates used n the primary financial statements Other Information aciosied earn.,-ns u-' ca- _ if .-.r.C CJj'fSn: C05` tre dec.:,ne m pi:rc^?.src :)~ iiaoi'ities heic dunng ;ne ,-ea- A' ' not be aggregated r.e sc., s.: j - -- This gain arises because '3:2 company had mere !i.?.c::>Tes . -<- -e" m collars to be repaid ;.na>' n a;:o.: : --. ,v . fixed in dollars io se 'oceived `A .- 2 un--:- alised gam does not repress-' c: r ; v. be received in me future n dees =- important hedge agamsr inflat.cn as f s ner monetary liability position wiil 00 paid .n cc 3.;. which have a lower purchasing power nar the dollars originally received m return tp: the- obligations Consolidated Statement of Income from Con tinuing Operations Adjusted lor Changing Pnces (Unaudited) Thousands o' Dole's For ihe Year Enaec OecemDc-rji "9c2 Ab Rooonej t me P'TFTWV SuicfTton;: .rtiSTonca Cov Net Safes 3523 230 Cos; 0* PrcOLCIS Sc'C Depreciation Othe' Exoerses lmerest income Tj* 3ono"rf 501 51' 20 7i7 76 965 :*i 6: ' 00- Incorre iLObSl Irjrr Coi'inu'Oj Ope:^ri''-r3 =: *32 Du';rnas.f oev.^r ^a -t on ret --oriT'.r, 623 23? 5`7 GO? o:-..;. - ; ..- hu ujlt'u 5003 _3? 5' ' O'r _- 3" . . -- 'nciejibe >0 soc-: t c c -.ts cub*' o' 'rve'Mc- r|*r-. ni'c u'ooorly oiani .me rAouicrnpcii (iai.; r:u' He y?3f" of ncrOASt? to Uv oe'*?Tar one'* 'o.-?' 1'TC'^iSo r' >0-^,1i. Ovrff .(.Olio' I in ;r - .. I : j GAF 13239 30 Comparison of Selected Supplementary Financial Data Adjusted lor Effects of Changing Prices iin Averaae i9S Dcnarsi o' Do"<v Exccc: P--** Sr<vc AmPuhfS Net Saies ccs! n,o'r^r5,ion ,ifj t.sr^c 'or genera; iniiat c" mco^e (Loss' Oom cc^'iCu^c ope'fi'mn- income (Loss) per ccmmcm 5r,sre Net assets at year-enc Current cosi information income (Loss* from continuing operations income (Loss) per common share increase n specific prices of inventory ana property over tunacri pttcct of increase in the general once 'eve! Net assets at year-end Olher data, adjusted for general mttaiion Purchasing power gam on net monetary liabilities held during the year Divioends per common share Year-end market price per common share Average Consumer Price tnaex 'SS2 ~ M "" i , Eh' 2"3 t i i i-.0 9771 ( 97i 3 905 269 794 6 141 SO 13 84 289 1 -9c5 7 * 7 73 15J 52-t -4 12 245 252 i5i 733. (3 92' (25 988i 246 074 23 066 85 14 76 272 4 ;-2-s r- 257 S~3 1 -r 1 *28 265-442 32 264 90 14 96 246 6 --- 4 'r " " --_2 b<,, * 9'.' 12 74 2* 4 ',-4 -.- Quarterly Financial Data Millions of Dollars Net Sates Cost of Products Sold First Si39 5 M9 6 1982 by Quarter Second Third Fourth S163.4 S179 2 S 1 4 1 1 136 6 1398 122 6 P.rst S ! 75 7 * 39 5 198* tv Cuant" Second Tr 3i74` : - 5 135 2 Ir- 4 ''2 ' -r - Gross Profit S 19 9 S 26 e s 39 4 S 18 3 S 37 2 S 30 ` : 2: ' : ' 2 Income (Lossi from Continuing Operations Belore income (Taxest Benefits income (Taxes) Benefits $ <4 8) S 4 2 1 1 47 S 12 9 29 s te 3i to 5l S 44 S c^ M3) ' 1 7, ,, ..' * u :_ . 3 Income (Loss) from Continuing Operations Income from Discontinued Segments. Net ol Taxes Extraordinary Credits (3 7) B 9 isa (6 6i 53 -- -- -- 1 0 i 2 09 35 6 3 1 -: 06 08 1r. -- - Net Income 5 26 S 10 1 S 16 7 S 26 8 S 29 3 :2 5 1 7 * Earrings per Common Share ` (Dollars! Pnma'y Continuing $ i 32: S 57 S i 06 5 < S 16 5 2- Discontinued Extraordinary 37 - - 06 Oc 06 2 4~ On - ----- Net income Fjiiv D luted Continuing Discontinued Extraordinary S 13 5 65 5 f 12 $ 18- S 50 5 90 5 i 40. -------- -- o: 05 1 QG S 22 5 29 5 '.-4 ; 5 2v 5 . :c ; ---- Net income S 57 S 95 s sc `in acccroancn ;vitn :nc provisions cl ape Go -"On Nr. 15 eamTiq Sper 1>hfire ate c?' -. sec r the annual period Accommcu annua1 cam nos c.'1 sham *v"' "o' nece?'Far. V mp tea >it 'c`QLire OmrJOC-- nol di.ulve 7 :: .- - j. - - - 31 GAF 13240 GAF Locations Corporaie Offices uc Wes: 51 Stree: New Yorx NY 10020 i2'2) 621-5000 Domestic GAF Corporations plants research .'aboratones. sales offices, and distribution centers a^e located throuanout tne U S A Chemicals Building Materials Alabama Huntsville California Irvine Illinois Lombard Kentucky Calvert City Maryland Hagerstown Missouri Annapolis New Jersey Bound Brook Linden North Carolina Charlotte Ohio Cincinnati Pennsylvania Blue Ridge Summit King of Prussia Texas Arlington Seadrift Texas City Wisconsin PemDine Alabama Mobile California Fontana Colorado Denver' Delaware Wilmington Florida Tampa Georgia Savannah Illinois Joliet Indiana Mount Vernon Kansas Leawood Maryland Baltimore Beitsvilie Massachusetts Millis Minnesota Minneapolis Missouri Kansas City St Louis International GAF Corporation s maior marxeting and sen/ice facilities are located througnout tne wond Australia fylelDourne Sydney Austria Vienna Belgium Smi-Nixiaas Brazil Sao Pauic Canada Mississauga Denmark Vifum Finland HeisinKi France Pans Great Britain Esner Mancnester Greece Athens Israel Te Aviv Italy Milan 32 New Jersey Gloucester City South Bound Brook New York Buffalo Syracuse North Carolina Charlotte Greensboro Pennsylvania Erie King of Prussia Wilkes Barre South Carolina Chester Tennessee Memphis Texas Dallas Virginia Norfolk Richmond Springfield `So'a Feoruaiy 25 '903 Corporate New Jersey Wayne New York New Yorx Domestic Subsidiaries GAF Broadcasting Company Inc New York. NY GAF Export Corporation New Yorx NY Carolina. Puerto Rico GAF Hawaii Inc Honolulu Hawaii GAF Internationa1 Corporation New Yorx NY Japan TokvO Mexico Mexico City The Netherlands Schiedam New Zealand Auckland Norway Oslo Singapore Singapore South Africa Sandton Spain Barcelona Sweden SlOCKnolrn Switzerland Zug West Germany Frecneo Affiliate. GAF/Huls Chemie GmbH Mar: West Germany GAF 13241 Corporate Offices 140 West 51 Street New York. NY 10020