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GAF CORPORATION ANNUAL REPORT 1981 G*F 13169 Table of Contents 2 Message :o our Sharenoioers 4 Chemical 8 Building Matena s 12 international 14 Corporate 18 Directors ana Officers 19 Managements Discussion anc Analysis of Financial Condition anc Results of Operations 21 Review of Consolidated Financial Information 22 Summary of Significant Accountmq Policies 23 Consolidated Statements of income 24 Consolidated Balance Sheets 26 Consolidated Statements of Chanqes in Financial Position 27 Notes to Consolidated Financial Statements 33 Auditors' Opinion 34 Supplementary Data 36 GAF Products and Services 38 GAF Locations 5.GAF CORPORATION 1982 0100-028 Pr.niea m USA GAF 13170 Financial Highlights Nat Salas Incoma (Loss) from Continuing Operations Income (Loss) from Discontinued Segments Not Income (Loss) Earnings par Common Share Primary Continuing Discontinued Net income (loss) Fully Diluted Continuing Discontinued Net income (Loss) Cash Dividends par Share Preferred Common "Figure omitted--not dilutive Financial Highlights 1981 S 672,314,000 S (28,236,000) 54,296,000 S 26,060,000 1980 S 677.216.000 S 10 323 000 (243 799 OOCi $(233 476.0001 S(2.24) 3.86 $ 1.62 S(1.57) 3.07 S 1.50 $ 1.20 S .80 $ 50 (18 07) $(17 57) $ 1 20 $ 77 "979 S683 749 000 S 25 828 000 2 355 COO 5 26 183 COO S ` 66 i7 S ' S3 $ 1 49 '3 S 1 62 S i 20 S 68 Shareholders Information The 1982 Annual Meet ing of Shareholders will be held at 10:00 a.m., Tuesday, April 27, at the Marriott's Pavilion Hotel, One Broadway, St. Louis, Missouri. Stock Transfer Agent & Registrar Citibank. N A in Wan Street Sort 3195 New York N Y 10043 (212) 558-7887 GAF offers holders of its common ana pre'errea stock the opportunity to buy adaitiona! shares through an automatic divioeno rein vestment service, admin istered by Citibank N A For further aetans contact Citibank N A in Wail Street Sort 3197 New v0rk N Y 10043 (212) 558-5382 Form '0-K as filed with me Securities ana Exchange Commission may De octamec. free of cnarge co writing to GAF Corporation "40 West 51 Street New York N Y 10020 investof Relations GAF 13171 Dr. Jm Wm*r Message to our Shareholders: "j n 1981 GAF sales vcm cur j continuing cnemical arc m buiicmg materials busi nesses were S672 5 miincn compared witn sales of S677 2 million in 1980 Earnings from contmumg anaaisccntinuec businesses were S26 I million or Si 62 per share primary com pared with a loss of S233 5 million or $17 57 per snare primary in 1980 In eacn case the years earnings figure is affected by provisions for dis continued businesses in 1980 there was a prevision cf $244 2 million (after taxes) to cover the estimated loss from discontinuing several busi nesses. In 1981 $54 3 million (after taxes) of this reserve and of a smaller reserve related to 1977 discontinu ances was reversec \e.\ -c-s "p stare re re 1 id 00C -nits .me cv.essince -946) aca re; "9SC ; aepressec re>.e c` ' 3`2 2" uhits Voreove- ex''aore namy nigh nteres- -a:es throughout tne .ear -a; a~ eve;--iore neca; ve e--ec- re tne reroo'ing ~-a'<e-. re--a me maicr ca-- o' 3A"s c_s - ness As a reset saes re.enues were sown a.mps; 6 percent compares w-m '9canc cos; increases cou c re be passea aiong r price rcreases Results we--' `re" a profit of Si3 7 million tc a os = of S38 6 million This inc.-care a $15 1 mmion provis on `ofelt mill shutoowns arc reflects lower unit saies. cost increases ana additional expenses relating to commercial roofing The depressed economic scenario of 1980 was intensi fied in 1981. Tne international recession seriously damp ened the demand for cnemicais. and the performance of GAFs specialty chemicals in achieving a 6 percent increase m sales anc a 10 percent increase in earnings last year is therefore particu larly notewortny ~nis increase comes m spite of a $3 4 million reduction m cnemicai export profits, due primarily to the strength of tne u S dollar agamst foreign currencies ana the generally aepressec marxet for tne roofing granules segment of the chemical business On the other hand. GAFs continuing bunamg matena's business suffered the f ji orurt of the years econom c climate ana naa ns worst year m me post-war era GAFs continuing operators snowee a loss for me year r $28 2 million tafte- taxes 1 as a result of the above howevethis loss was offset by me res toration to income of S43 6 million (after taxes] as a res_ ' of me successrei comp-et re of me oivestiture program pegun at the enc Of 1980 A; re time the company statec -- s' 1: was unaenaxing a mare-restructuring which wcu c mouae ofienr.c for saie a numoer cf operating cu=.nesses anc estabi'sning a reserve ana iiaoi'itv for tre program on what was be1 evec to ce a corsev a: -,e Oasis 3vJanua-y i952're program was essenca.., compietec Six businesses were sere starting with pictonai croc- GAF 13172 ucts n July graphic arts anc /nyi siang m Augjst flooring "i Septerroer paper aro rr.nlpoarp m NovemDer anc enc- mg witr reprcgrapmcs r. Jamjar/ ''982 Tnere remains so^e reai estate to De soic ana some receivaoies to De coi'ectec One business rao.o station WNCN-FM in New YorK s being wthcrawn from tne program irciuamg the reprographic sae St7" m.iiion m cash ana aimost S'5 million in long term notes have Deen generatec to aate Another S23 million in casn is expected to be receiveo in 1982 from tne continuing nquiaation of in ventory ana tne closing of several reai estate transac tions in aaanion an estimateo tax benefit of $57 miinon wni oe available to off set taxes on income m future years The Divestiture protect recuirec the utmost effort from a great many GAP employees ~he program was centereo m the company s commercial ceveiODment Department ar.a tnese people >n that oepanment as we'i as those m xe accounting legal tax ana Dt.-er Departments resoonsiDie ter the many facets of mese simultaneously ongoing negotiations worxeo unremittng.y to pnng tne program to an eauitapie aro rapio concius.cr Trey biC a remarxaoe |0D ana were resoonsipie tor me success of tne prog'ar~ 'hose management peoDie wno were going with tne cusmesses Demg soio aisc ~ac tne aifficuit iob of ,ry. rg to maintam lovalty aro ooerarrg efficiency in me un certain Climate existing be tween me announcement of saie ana tne consummation One other financial improve ment which neipeo achieve tne previously mentionec re versal of tne liability reserve was a major change m tne corporations employee cersion func asset mx A ceci- cateo bona portfolio was estabiisneo which is provi ng an income stream suffi cient to cover the actuarialiy caicuiatec payments to all retireo ana vested former em ployees. inciuamg those Of the discontinued businesses This portfolio, plus a change in interest assumptions ana a concomitant increase m the salary assumption, has maae tne pension tuna fully tunaec for all existing prior service obligations As a result pen sion contributions for 1981 and future years are substan tially reauceo Now that the redeployment program's essentially completea GAF is able to turn its full attention to improving ano expanomg the opera tions of tne two continuing businesses Summarized m tne chemical anc corporate sections of this report are some of tne many activities unaer way in 1981 aimeo at increasing sales ano profitability of our spe cialty chemical pusmess New prooucts nave oeen aooeO to the nne ano new uses have oeen oeveiooeo for existing prooucts Tne customer base has aiso Deen Oroaaenea consiaerabiy This broao customer base ana me wiae spectrum of uses con stitute tne strengtn of our specialty chemical business While it is very Difficult to out perform the economy steaoiiy we have managea to snow growth ir mis fieia year after year, anc will maxe every effort to continue to oo so The ouilding materials seg ment of GAFs business, on theotnemano ism a dif ferent posture The company continues to believe tnat t is the leading supplier of resi dential roofing products in the United States However, a re turn to former rates of prof itability is preaicateo upon lower interest rates, increased housing starts to norma1 levels, ana recovery of tne renoofmg market in the mean time every effort is being maae to ensure that when aemana revives. GAF will be in the best possible posture to recover earnings promptly The conclusion of the reoeployment program nas aiso maae it possiDie to streamline ana strengtner the organization ana reauce costs consiaerabiy Ail of our managers continue to 'eview meT operations towaro this enc in sp;te ot the extracramary cifficu'ties of 1981 tne con tinued strength of the chemi cal operations jomea w tn me cash inflow ol ine Divestiture program have Strengthened the comparys caiance sneet With tne January '-982 saie of the reprographic DuSiness $64 million has been acpnec towaro oeot recucnon urtunoec pension iiabnit.es nave 3'sc cee'' e -- Discusses a-e "e'e'ce oer wav to -ec ace ",e .-.c' cwee m-ee-vea' 5225 ~ e crecii ac'ee'^e-: 'ecc aif c with a consoi o' ca~-s = me oeg n^ng c `96' w = new 'onc-te'm re.c . ~z z'sz agreement for 3"5 ~ e The pretrial mctiOn.S m GA-s antitrust case agams: East man Kooax m tre u S Q.smc' Court for tne Southern D;smc: of New York nave cee^ resoiveo favoraoly to GAF yc a trial aate cf May 3 nas peer scneauieo Tne company contmues to Pe confioert of tne successful outcome ot ns case The Current economic Situa tion m tne Untec States arc aoroac maxes n aiftcw.i to soeax optimistically about tne immeo ate future However me steps taxer m i9r to streami ne ana strengthen GAF give every assurance mat our crospects for g-owtm tne aecace aneac con tinue 10 be Strong We xnow mat tne team of GAF peccie now m piace nas me sens me tools ano me cetermmation tc acmeve create' g-cv-m ana prol.taDntv as mo econ omy mproves Bv Oroer o'me Boa'c of L/Irectors Y/ Jesse Werre' Chairman or me Scare March 3 t962 3 GAF 13173 R**ult* (Dc.ia's .n Mu hens Me: Saes Oi'ec; Ooe-a: TIQ Prof !* C:-r:*a'9 *~z ;ce'ses 1981 $300.8 S 98.6 1980 $284 4 S 52 0 Product List Chemical* Acetyene Per vat ves Ag-oJiurai SDeciait.es lr'te'necia:es ,roo Powaers Mcno^e'S Peiv-Tie-s Solvents Soec a ty Cnemicais Surfactants Text ie Chemicals Errainaarirrg Plastic* =BT TrermoD'astic 'Voicing CcmDOunOs Mineral Products Vimera Gtanu.es Chemical Sales and profits pocucts ot acc.e a.e-age pr-ce soto r -e a- ,e . s~e oricwioe sales `or WGAFs continuing chemical business ouanft.es to a as .a- f. r use's O'a ce ,3-e\ r u-iGue acp- :a- c-s were S300 8 million an in crease of 5 8 percent over m 1981 reccca'. cc~- 1980 tmjec essteacv c-cg-ess fmong new uses a~c re... Direct operating profits m CuSto-^e'S ne'e a-c acoac 1981 were S56 6 million an increase of 8 8 percent ever for ex'Stmg proc.cts 3= .'.r as m introducing new C'CC- 1980 JCtS lor cusiorre' e\3 -3' These results are aue to over all strong oemano for GAFs tnrougr its mar<e' ce-.e ce ment activities specialty chemical prooucts aii of tnese GAF procuc: mes ana relative price firmness can oe expanaeo omy . --e'e Tnis is particularly noteworthy are effective marketing anc m the face of the problems in tecnmcai sea-ices as we-i as certain market segments, continuous research arc de notably continued low De velopment efforts m bom mand for roofing granules, product ana process im ana a S3 4 million recuction in provements Tneseweare exoort profits aue mainly to committeo to ao ana there foreign exchange rates on are positive results to reccr - cnemical prooucts solo an these areas for i98* aoroac Aettylm* derivatives This strong performance in Use of GAFs acetyiene- 1981 arises from the mixture basea po-ymers grew m of factors that have given both cosmetic anc prarma- GAFs chemical business its long record of outstanding ceutca applications Pc-i-,plascone XL' cross-linxec growth and profitability polymer (crospoviocne \F, Frst of an tneGAFpoauc; lines (it the classic Definition has been accepted by ~a ; pnarmaceuticai marutactu'e's efenemea' specialties Tms means that t.ney terc to Pe GAF 13176 6 as a ieaomg oismtegrant for use m taoiet formulation This aoos another specialty item to the list of GAF products sucn as Piascone - polymer (povidone USP). already accepteo m such pharmaceuti cal applications as tablet bmcers granulating agents ano coating agents m the cosmetics field. GAFs customers for Gantrez * hairspray polymers mtroduceo new consumer products and used increased volumes of our products The company continued to offer an ever widening choice of film formers for use in both pump and aerosol applications GAF is recognized as the leading supplier to this market in the conditioning shampoo market Gafquatpolymer sales increased sharply with the introduction of sweral new consumer products The demand for GAF solvents and intermediates grew with special emphasis on non toxic solvents tor industrial cleaning ano coating ap plications. intermediates for plastic ano polymer synthe ses. and corrosion inhibitors for oil well additives Even in the depressed automotive market, growth was experi enced m the use of butanediol for polyurethane production Gaftex! PT cross-nnkeo methyl vinyl ether polymer is a new thickener for textile print pastes it reached com mercial sales volume as com pounders recognized its su perior viscosity and its ability to give sharp prints on resintreated goods Butanediol sales to the man ufacturers of PBT engineering plastic increased. GAFs own line of Gafite4 PBT resms ex panded appreciably as new products were introduced and customer demand grew. Some of the new Gafite brand products introduced in 1981 include a foamabie PBT and a new resin for films Tne foamabie product has extra lightness and better surface characteristics. PBT films are being evaluated for packag ing applications where in tense heat is encountered, such as in "hot fill' food packages Specialty surfactants The domestic surfactant line was pruned of a number of small-volume low-profit items m 1981 Special emphasis continued in the cosmetic paper, and emulsion polymer ization areas Sales and profit results both showed improve ment from existing prod ucts and from new product introductions Among the new products introduced were two new Aiipal* sulfates for adhesive production and a new igepon* TC surfactant, a foaming aid tor toothpaste Other specialty chemicals Market development con tinued encouragingly on GAFs new family of Gafgard'" polymeric coat ings for use m UV or electron beam cunng Three Gafgard products are now available to resilient flooring producers who need impact-resistant coatings A new patented product Gafgard 233 coat ing. was introduced m 1981 it offers super abrasion resis tance for flexible film sub strates of all types ano is being evaluated by a variety of film manufacturers As a result of strong growm opportunities m acetvrene chemicals ano a premie' position in both, the acetyiene and specific surfactant '~a-kets. GAF eariv r 1982 launeneo a program to ex pand its sales efforts cv opening three new sates dis tricts ano increased me size of its specialty chemica1 sa es force by 35 percent Roofing granules GAFs roofing granges are solo to manufacturers of roof ing shingles ano roil roofing The volumes used are there fore directly related to the levels of production of roofing materials in spite of the de cline m roofing volumes sares and profits of GAFs granules in 1981 were close to 1980 re sults This was due to seve'ai factors including some volume increases from changes m customer mix ano improved piant efficiencies The capita expenditure program begun in 1979 tor the granules plants was contmuec it resulted m additional capacity coming on stream as well as the com pletion of several maior pollu tion control proiects GAF 13177 Result* 'Doga'S n M-i; ons> vet Sa'es D 'ec: ODeratinq ro`,i (Loss)' z : .ret i~ : - *$ 1981 S371.7 S (38.81 '980 $392 8 $ '37 Building Materials Sales and operating results yrfc aies Of GAFs con tinuing Cuncmc -"ater'ais Ousrness in '98' wereS37i 771,1,100 cow S21 * m'l'C'1 from S392 8 m lion in 1960 Toe prpplems wnicn affected saies m 1980 were ail intensified m r96' *nere was an aosoute oecune m pnysicai volume of roofing materials sopped wni e me cos; of raw mate rials leobvaspnait in creased appreciably P'Cr.g 'eveis curing me year were almost fiat Bunping materials naa an op erating loss of S23 5 million against a 1980 direct operat ing profit of $13 7 million This followed m part from me oroolems wnicn so severely aftecteo sales m acornon a write-off Of $15 1 million was taken at year-ena for me clos ing of tnree felt mills ana accelerates deprecation on certain remaining felt lines Cec'eas ~z ce~aec Serenes- 'Sc' : ng 'ac c GA-s 'co'-g cams 3e-.e- 3 : racc a^c rta-sas 3 \ sc--- o~ -ce- - :e 3iecer'ce"~e e' O's c,a-ceca-a se-.e'H ~On--s S-.'OCAexcec c~ c '-e c =" Da,.as "exas a~c Fcr ca a -e cc-cam root rc pis'fs "a-.e cee- ope'at.rcat -ec-ceo e.e m'oug-cut -e seccc -a tne yea- : sneu o ce -ca;: mat me erme roo'-c -:_s' ,s reporting s,~.i,a' zorc : The same factors or eco nomic ^ncenam-', arc no'nteres; rates present r 196.. existec m '981 at eve'' mo-e intense levels Ascna-r c ce nave neanv aouo.eo r -re ast mree years Product List Hoofing Products Accesses es Asorac Snirgies Be- f-^o Poofng Vate* a s Ccai ng & 3ias:c Cements RO'1 Rcc^g veo: S/ste^s Insulation Products Bu' O-'-g ^Sijiai on SufJ-^c :nsi>ia::on "astene' Sy$ien~ GAF 13180 i! is Denevec that GAFs snare of market m the roofing busi ness has been maintained During mis per'OO When the oemanc revives n both me reroofmg ano new housing markets me company will be m an even better position to participate profitably m this basic American inaust'y Tnereto'e. m spite of tne wrenching economic cir cumstances of 1981 ana the resulting stringent cost con trol programs m all areas investments looking to future growth ana improved efficiencies continue to be emphasized Tne new roofing line ap proved in 1980 for the Dallas plant was completed ana be gan a successful start-up m December A mapr program of technological upgrading of the roofing plants is unaer way This several-year effort is expected to reduce manufac turing costs ana improve Quality, which in turn will in crease sales volumes ana profit margins ano thus main tain GAFs ieaaersh'0 position m tne roofing industry This maior effort aims at reduction m raw material ano ere'gy consumption improved Droduct yields anc more efficient qual'ty control proceoures Joint research Development ana engineering efforts reacnec the first implementa tion stages by year-ena 1981 Roofing The conversion to tne use of glass mat as a roofing sub strate m place of organic felt continued m 1981 for both rooting shingies and builtup roofing Production at the new glass mat plant in Ches ter. South Carolina, was ex panded ana successfully met these increased requirements As a result of the accelerating change m technology ana the generally lower volumes of roofing material manufac tured during the year produc tion nas been curtailea on the companys nine existing organic felt machines Three felt machines at Dallas Kan sas City ana Joiiet nave been snut down ano written oh A orogram of acceieratec depreciation nas also been mpiementea for several aaditionai machines Glass mat has some signifi cant aovantages. such as lower asphalt usage which are expectea to lead to its greater use m the future, but the good qualities of organic felt-based products indicate that felt machines will con tinue to be neeoed by GAF for many years to come The year brought the intro duction of several accessory products to the built-up roof ing line, including Gafgias * flashing ana new expansion pint covers To generate sales m the re roofing market, a Roof Mamtenance/Repair/Reroofing Program was introduced to the trade in the fall of 1981 and response has been gratifying Saies ano prof :s of Ga"e"~c ' polyuretnane msuiancn usee uroer bu tt-up roc'inp ano manjfactjrec at GAFs plan; in St _ous Vtsscr ncreasec as greats' ce-etraton o` me market was achieveo Building supply centers GAF enterea tggt w.r ve builcmg materials suocv centers in place During re year four aaoitionai cen:ers were ooenec m Wilming ton. Delaware Buffalo arc Syracuse New York ano Beltsville. Maryland The program is still in star.-uc but i nas aireaoy achievec substantial sales Mpreover tne sales Of GAF roofing procucts maoe through tnese outlets are ;n markets wnere GAF is under represented ana woulc tnere'ore not ore'wise nave been acnievec GAF 13181 "c Cjs "esses m cus'cmem aroupc :-e c'c .vere 5" ` 0" "`?S* :c~carec a " Sc-t -1 o" " "95C ' errs ;_"e"c:es sa es r ~os: z` r-e c"e""ca c'cc-c <res spowec "ceases c^: `orea" ?< z-a-ze "a"s a' c". .ara-ces "ac a s:'0"c "egatve '~oac: S'"1 3'1'. OPe'3!`"C Cro; '5 "ac a zee me c` S3 - --niion c-e d' -an;. 'o 'he s'-e^-- c "6 j S conar aga-sr `ore c" cc'e^ces ~pese cures are `ncuoec n me es-rs z` '"9 cper"'ca anc c- -z "c --arena-s wcncwoe ;rc~cs Mcs: o` me GA" saies cursioe me jmrec Stares are cnen ca's ~pe company s speoaiu cne--icais man,,-a::j'eo >" me jTitec Stares a-e exponec 'nrccg-c-' me wcma a"c sac crect.v ov GA= sjDsoanes 0' mrougp a smburors macatiOG D^ranecioi ano terrafvcroruran a'e ""anjtactj'ec apc soc <r Eu'ope Dv GAF-Auis Chemie a lomr venture between GA?1 Corporation anc Cpem<scne Weme `--u's wmcn opera:es a plan: ;n Mari West Germany ~he companv also manutacrures a me o' fmer proct-cts m Smr-Nixiaas Be'gum "".ese are soip throughout me wo'ic ousiae me upnea Stares ne receciov'-'e": coca-- createc sDeca o-ic^r es mme continuing GAF "te--a- rionai operat ops c,,e '0 '"e sa(e of 'ne ma.or 3AF -- struct-res n Ej'cce Aust'a1 a anoCanaoa Aneworgan.aat'ona! structure nac to be estapiisnec anc some new onysica locations nave nac to oe founc for tne cnemica' marketing oepartments m these countries The new streamnnec organization s essentially tn p'ace ano GAF marketing offices tecnmcai service centers anc warenouses are ooeratmg n 17 locations m Eurooe ana me Near East as wen as Canaca Mexico Brazil Austra ia Singapore anc Japan (i O 'S'- 2' T 3'C.`. C T " I accroc'2'~ zz?.'z~i ArQi-a' ^CC'"3'"` ~ iS !C C9`.'0C ^ C ~: ' GA-$ "er1:, : " ^ ~v-r ras GAF -3 c a^e oecz~""c. ~cre rcc'c ca'K anc esre* ra . Dev ve tv!" e s' ~c : ~ . systems jsec acrza?. s creates new. mar-.e` ~z re* portunities vvr'iC' 3"e ce ~ c exploded an .mptemenie A now and atraamlinad nflional operation it in plac* with GAF marketing offices, toehmcaJ itrvio centers and warehouses operating throughout forope, the Meat fast, Canada, Mesico, Braxii, Australia, Singapora and Japan. GAF 13183 *5 v Juliette M. Moran Vice Chairman Jamee T. Shtfwin Executive Vice President Richard F. Smith Executive Vice President 14 GAF 13184 Corporate & Other Businesses Redeployment program n December 30 1980 toe company announceo mar c was classifying as discontinues; for accounting purposes several businesses ana mat these businesses wouio be offeree for saie A provision ot $244 2 million (after taxes) was taken against i960 to cover tne esnmateo costs o' these discontinuances The announcement brought m more than 400 mauines m the first few months of 1981 By the ena of March the firs; letter of intent looking to the sale of tne first of these busi nesses had been signed By January 8.1982 the program was essentially compietec with the saie of the last of tne businesses offered Tne chronology of the sales is as follows July 2--sale of pictorial products business for approximately $25 9 million including notes of S2 5 mi.lion ana accounts receivaDie retamea by GAP August 13--saie of graphs arts business for approx imately S38 0 million mcluong notes of S5 0 million ano accounts receivable retained Dy GAP August '9--sale of v;nvi siomg business for approx imately $4 2 milnon incluO'ng notes of $0 9 million ano accounts receivable _etameo by GAP Seore~oer 29--sa e ' mg bus-ress `c acc-: 55 miirpn m cash i\ove~cer 2--sa e r esc ape rn'i'toarp E_s "ess S4 5 m.nic" i~ cas" Jaruar/ 8--sa e c rocrographic bus ness `c acc-' S83 9 mm c" cas" =-c mi ip" t notes GA" -e'2 "e neanv S9 romo" " -ece .a Dies anc other assets a" : the buver assume; S2" 2 million m liabrnt es As of January '982 roe-e -= mainec unsO'C on>v two _" ' wnich nac been o^ereo " original package One s aidle piant in uonet "imc s wnicn .nac manufactured au tomotive mastic ano wr.c" was permanently shut oov." n miO-1980 Tnis well ma-"tameo ano we.i locatec p a-* snouio prove attractive as a real estate investment wi~etne economy m tne Vicwes: is more favorable GAF Broaocastng Compa". the SUDSiO ary Whic" rc ^6' WNCfv=M anc its assoca'e: magazine Keynote ccrf-je: ;ts steaoy growth t sales a~c profitability ana acnieve; a profit Defcre taxes ~n,s rSS_ reflects increasing sa'es revenue wnch ir rorn :a""e iron-,increasing recce"-' c" me station s prog'a~"r"c buaiitv by listeners arc scc"sors ir 198' 'hiswas'e:;; GAF 13186 'zez Z-, me ces: c c_s Peacoov Awem to WNCN !cr Dve'3'i sxc9i,e'ice m c'assza- muS;C progra'"'"me " vew o` mese circ jr^sia^ces aro 'e successtu1 comp e.cr c: me overa 1 redeploy ment 2rcgram WNCN -s Demo .vimcraw" Acm me D'Ogram ir 1982 it is expected that most of ine remaining winaacwr of me already accom plished deployment can be compieteo Tn:s mciuaes collection of me remaining receivacies ano sale of mis cellaneous assets primarily eai estate m Europe As a result of me saies unae' me divestiture program the reserve ana naoiiiiy estabisnea at vear-ena 1980 for aiscontinjea segments were reevaiuatea anc determined to be more than needed to cove' anticipated costs Tne excess of $43 6 million after taxes of S6 5 million was restored to .ncome `mm discontinued segments Research, Development and Engineering ' ne COmcanyS nesearcn arc develop ment act.vifes m 198' resuitec m new ana improved omaucts ana processes for com me cnemicai ano bond ing materials saies lines in addition to tne individual items discussed m previous sections of this report new products from researcn now unaer further market evalua tion include A new class of highly effective corrosion mnibitors for metal A new solvent for aromatics extraction ir petroleum processing Electron beam-sensitive materials for applications in microelectronics Novel materials for roofing shingles in this area work has also continued on the use of sulfur-asphalt emulsions as asphalt extenders in shin gles This researcn program has been supported m par. by funds from the U 5 Government Process improvements in ail of GAPs manufacturing oper ations continue 7he nighpressure acetylene aervatives line nas oenefited m 1981 from new and improved catalysts and from cebottleneckmg whicn gave sign:' cant capacity increases m certain key processes "he comcany also naa en couraging results `rom 'ts ongoing eifohs to increase efficiency of energy usage A great oeai of activity centerea on meeting government stanaaras of environmental control Capital expenoitures of more man S5.000.000 were devoted to this area m '981 Parsonnol In 1981 there were 19 labor contracts negotiateo for con tinuing businesses an for multi-year terms Contract terms compared favorably with those reported by the U S Department of Labor Three strixes were experi enced during the year at Denver. Colorado, for 3i days. Miliis Massachusetts, for 35 days and Calvert City Kentucky, for 24 days GAFs continuing businesses employ approximately 6.500 people A simnar number were employed m the discon tinued businesses ana wen ove' 90 percent of those who left GAF continued in their employment with the new owners of these businesses Management m November a new severmencer omce of the Charmar was organizec to provice overall director to me co'poration 3esiaes chair man Jesse Wemer me new group me jpes me vice chair man me two executive vice presidents ana the three sen ior vice p'esiaents m cnarge of GAFs ope'anng groups -oce- - rf'tf' .-. e-e' se" Gene's cou-'se s~: ~e:? tarn v- 3ece' _ad cee" r Octoce- Ca' = = :-awas e eceo se~ . :e : den- 'esoc"s c e m- "'9' tiona1 Dce-a'c-'s V- z:-s icmeo GA- n most recen'w .ice e'es ce arc neaa or me ;oi--en aeveicpme-r pecs--e~' in November ^aympm; ,, Lacroix cbhfo.ie'was a s: e-ecteo vice pres'ce-" v LaC'Oix lOinec GAF r '9~ as a division cont'o: er m Marcn 1982 3emg-c _ Kaoeii vice presicen' was also electee'.reasu'9' -e oneo GAh m as -e: of corporate taxation Board of Directors in Novemper Dr Ricna'C c Smi;K execufve vice cres dent of me corporatcm lomea me beam succeed Jay P Oiso- `or-me- pres - ctem cn.ef oce'atmc of ce ana board memos' ,v"c resigned >n mai mcm-^ Gap 13187 mm/ w - tr-a -- j Jesse Werner Cnairman Juliette M. Moran Vice Cowman T. Roland Berner Oa'rman or me Board Curtiss-Wngnt Corporation Peter Bosshard Executive Vice Presioent Crepir Suisse Augustine R- Marusi Formerly Chairman of the Boaro Boroen inc James T. Sherwin Execurive Vice Piesiaent GAF Corporation Richard F. Smith Executive Vice Presioent GAF Corooration Herman Sokol Formerly Presioent Bristol-Myers Company Nolan B. Sommer Formeny Senior Vice resiaent American Cyanarac Company Jesse Werner Chairman of tne Boaro Juliette M. Moran Vice Chairmar James T. Sherwin Executive V>ce President Robert Spitzer Chairman of the Boaro Treadwell Corporation Richard F. Smith Executive Vice President Robert H. Baber Senior Vice President General Counsel ana Secretary John A. Brennan Senior Vice President Carl R. Eckardt Senior Vice President Louis Q. Zachary Senior Vice Presioent Jonathan Berger Vice p-eS'Cem John J. Butler v.ce c'eS'Cem Bernard L. Kapell v.ce F'esice" arc Treasurer Raymond J. Lacroix Vice P'es.cem anc Controner Donald W. LaPalme Vice Presoent Abraham Lindenauer Vice President Robert F. McCarthy Vice President Raymond W. Smith Voe Pres.aem The Board of Oiroctors Audit Committee, con sisting ot outsids direc tors, meets separately with the independent certified public accoun tants and company management at least twice a year to discuss the scope and results of the annual examination, internal accounting controls and significant accounting matters. GAF 13188 re Management's Discussion and Analysis o< Financial Condition and Results of Operations Financial Condition On December 30 1980 the company announced it was undertaking a maior restructuring whicn would include offer ing for sale a number of operating businesses By January ot 1982 the program was essentially completed In sum mary a total of six businesses were sold starting with pictorial products in July, graphic arts and vinyl siaing m August, flooring in September, paper and millboard in November and reprographics in January 1982 In addition, the latex operation in Chattanooga, Tennessee, was sold during the latter part of 1980 Total proceeds from tnese sales in 1981 amounted to $107 million in cash Initial pro ceeds of $63.9 million from the sale of the reprographics business were received by the company in January 1982. In addition, the company projects $23 million in cash from the saie of residual assets during the first half of 1982 that will complete this program. Additional cash inflows will accrue to the company in future years as approximately $15 million in interest-bearing notes received from certain buyers are retired Finally, the companyS financial condition was further strengthened by assumption of $21.2 million in liabilities by the buyer of the reprographics business The relative impact of this program on the financial condition of the company is reflected in the chart below Total tong-Tem DeOt Notes Payaoie Casn/Snort-Term investments Net Debt Dollars m Millions December July i. Decemoe' 31 1980 1981 3i i98i St 93.539 J327 52I S2-5571 57 989 36.456 1 7 440 (21 935) (26 434) 113 348) S229 593 $337 543 $21967' During the last six months of the year the company's net aebt was reduced by approximately $118 million from the cash proceeds of the businesses that were sold stanmg with the sale of pictorial products in July 1981 The overall importance of this program, which was suc cessfully completed in one year, cannot be overstated Although the year-end balance sheets for 1981 and 1980 indicate a net debt reduction of approximately $10 million, the program provided more than sufficient cash inflows to neio cusnon the adverse cash impact caused by the build ing materials segment in a year characterized by a severe drop-off in new housing starts nigh interest rates ana rising raw materia' costs wmch could not be passed on to cus tomers. the companys financial position improved from 1980 The company s working capital ratio increased m 198' `rcm 1 46.1 to 1 88 1 This increase primarily reflects the ejects c the sales of discontinued businesses, me reduction m snortterm debt and the increase in inventories The significant increase in Accounts Heceivabie-Othe' reflects a recen able of $63 9 million for tne sale of me reprograpn cs business, which was completed in early January 1982 Put effective as of December 31 1981 Of the tota1 me'ease in inventories m 1981 of $44.1 million as comoarec with '960 $37 6 million, representing a 70% increase reiatec to me building materials segment High inventory levels resulec r severai plant closings in the latter pan of 1981 an meust'ywide occurrence. Re-opening of these plants will be depen dent on a reduction in current inventory levels ana a return of market demand The company's overall financial condition was further im proved in 1981 by the restructuring of the employee pension fund, as explained in Note 9 of Notes to Consolidated Finan cial Statements. A dedicated bona portfolio was estab lished that will provide income sufficient to meet actuana ll y calculated payments to all retirees and vested former employees, including those of the discontinued businesses This allowed the company to reverse pension liability re serves established for employees of discontinued busi nesses. In addition this portfolio and a change in mieres: assumptions from 6% to 7% have placed the pension piar in a fully funded position with respect to all prior service obligations anb lowered pension expenses by $7 5 million in 1981 Future pension expenses will also be lower as a result As fully explained in Note 14. the company replaced its existing short-term lines of credit in the first quarter of 1981 with a three-year $225 million revolving credit agreement with declining availability over the term Interest on these funds is at the prime rate At December 31.1981. $72 5 million of these funds were being utilized The agreement places limitations, among other things, upon dividends, capital expenditures, funded debt and otner borrowings The company is currently negotiating to replace this agree ment witn a new long-term revolving credit agreement tor $75 million Capital expenditures in 1981 were $27 6 million ana are expected to be about $30 million in 1982 During 1981 me major expansion proiec! at the Dallas Texas rooting plan: was compietea ana tne capital expansion program ter me granules plants continued in addition several maior ooi'ution control projects were initiated in 1981 a: various Diar-ts At the end of the year the company had commitmenis of $11 6 million for approved capital expenditures Commit ments under various capital and operating lease ooi gai ers are detailed in Note 15 ot Notes to Consolidated Fmanc a: Statements GAF13189 Managftflwflt's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations "he company s sales anc profit performance from con tinuing operations decreased m each year for the period 1979 tnrougn 198' These results were oirectiy attnbutabie to tne building materials business which was severely hampered by the depressed state of the building industry Consolidated sates decreased by less than 1% in 1980 edmoared with 1979 and again in 1981 edmpared with 1980. as additional chemical revenues were more than offset by a significantly lower sales volume in building materials infla tionary material cost increases m the building materials segment nave eroded tne consolidated gross margins from 25 1% m 197910 22.5% and 17 9% in 1980 and 1981. re spectively Total oirect operating profits of the two operating groups fell by 28 7% m 1980 compared with 1979 and by 72 6% in 1981 comparec with 1980 Tne Duiidmg materials business, as stated, was severely affected by the adverse economic conditions impacting the building industry, which were caused by high interest rales ana a fall-ob in new housing starts to 1.101.000 units from 1980s already depressed level of 1.313.000 units. Sales, which declined by 6% in 1980 from 1979 levels, decreased another 5% m 1981 resulting from a 13% lower unit saies volume for roofing products Direct operating results, which refiectea a 54% decrease in profits m 1980. showed a loss of S38 6 million in 1981 These results are primarily attributable to the following Continued increased costs of petroleum-related products ano otner materials and an inability to pass along cost increases Lower demand whicn resulted in the shutdown of the Kansas City and Denver roofing plants > higr interest rates which haa an increasingly negative effect on tne reroofmg market, normally tne maior part of the companys business A fourth Quarter 1981 provision of $15 1 million for antici pated costs relating to tne snuioown of certain felt muts Additional expenses relating to commercial roofing Management fully believes that this segment will return to its `ormer profitability once the current economic depressants ease ano demand for roofing products increases Also exoec'ed 10 aiC m this return to profitability will be tne me'easeo utilization of glass mat tor production 0* shingles, inus deceasing me companys reliance or costly pefcieum-feiaiea products Chemical profits for the year t98i increased 3 8% or 5 sa increase of 5 8% Tms represented an increase return on chemicai assets from 27 3% m '980 to 2S-2cc 1981 Contributing to these results was tne Seacr *t z~e<~ z plant which became operational in iate '980 to man.tacture butyneoioi a preliminary step >n tne manufacture c butanediol Chemical domestic profits -ncreasec 2J% ' 1981 as a result of favorable sa'es pricing ano umi vo'^me increases in specialty chemicals oeso'te a ower sa'es volume m roofing granules Internationa' airec; cce'atmc profits were off $3 4 million for the vear 1981 ori~aniv c_,e : the increased strength of the U S ooila' As indicated m the five-year oata m the Sumna'y o* Se lected Financial Data, the chemical segment nas snow'' aaverage yearly sales growth of approximately 15% ove- me period 1977-1981. Operating profits nave averaged more than 20% of sales over the same period s exoecteo -a' this segment will remain strong and continue ns growth .r sales and profitability Expanded marketing ebons nave been initiated and new products continue to be mtrocucec m addition, new uses ano new customers for existing orocucts have been developed Other operating expenses, which increased Si3 6 million (12%) m 1980 over 1979, decreased n 1981 by $2 6 million (2%) This decrease was primarily due to tne reduction m pension expenses (explained more fully in Note 9) anc cor porate Staff reductions during tne year which will more 'uiiy impact 1982's expenses The income tax benefits in i98i fully detailed m Note 10. consist of tax benefits on domestic losses offset in part by tax expense reiateo to income from foreign operations Tne change from a tax rate of 36 4% m 1979 to a tax benefit of 13 7% m 1980 arose primarily from the increased impact of United States investment fax cred its. depletion allowances, and the benefits of the Domestic international Sales Corporation on reduceo earnings For a further review of the effects of inflation on the companys financial statements, see SuDOiementary Data-Fmanciai Reporting and Changing Prices on page 34 GAF 13190 20 Review of Consolidated Financial information Summary of Selected Financial Data Statement of income information is presented for continuing operations Year Enoec December 31 1981 Dollars in Millions except per Share r* - '3 1980 1 9?9 * 97c 9" Net Customer Sales Chemical Suilcing Materials Consolidated Sales S300.8 371.7 672.5 S284 4 392 8 677.2 $264 3 419 4 683 7 $2i 7 " 39' 3 609 0 S16S 0 336 6 506 5 Direct Operating Profit (Loss) Chemical 8uilOing Materials Total 56.6 (38.6) 16.0 52.0 13 7 65 7 62 4 29 7 92 1 48 4 41 3 89 7 -2 7 3" 3 t" income (Loss) from Continuing Operations (28.2) 10.3 25 8 26 1 25 0 Primary Earnings (Loss) per Common Share--Continuing Operations Diviaends per Common Share (2^4) .80 50 1 66 1 83 1 677 68 64 60 "'"he following Balance Sneet amounts pertaining to years before 1980 nave no! been restated to separately identity amounts applicable to discontinued segments. See Note i of Notes to Consolidated Financial Statements December 31 1981 Dollars m Millions 1980 1979 1978 977 Current Assets Current Liabilities Working Capital S337.3 179.6 157.7 $482 7 330 6 152 1 $492 1 201 5 290 6 $472 2 179 8 292 4 S464 ` 186 3 27- 8 Property. Plant and Equipment--Net 196.4 200 0 308 4 280 6 262 9 Total Assets 559.8 698 3 835 6 785 3 762 J- Notes PayaDle Total Long-term Debt 17.4 215.6 58 0 193 5 '76 206 4 23 6 196 8 32 9 196 4 Shareholders Equity 134.7 122 3 369 0 35i 7 329 ' Market For Common Stock As of February i. 1982. there were 47.172 holaers on record of GAFs outstanding common stock The following information pertains to the company's common stock, which is traoeo on tne New York Stock Exchange Dividends per Common Share Fnst Quarter Second Quarter Thna Quarter Foum Quarte' 1961 5 .20 S .20 S .20 5 .20 1980 $ 17 $ 20 $ 20 $ 20 Price Range of Common Stock F'rst Quarter Second Quarter Third Quarte' Fourth Quarter 1981 High Low 14Vj 11% 16% 12V. 15% 11% 15V. 12% i960 High Low '"fit 7T7 3/5 8-5 14.; 10V 13--? 9 5 GAF mas paid cash dividends on its common stock for 66 consecutive quarters The company expects to De aoie to cay future divioencs unoer agreements bemgdiscjssed with cenain banks See Note 14 of Notes to Consol'catec Financia1 Statements GAF13191 21 OAF Corporation and Consolidated Subsidiaries Summary of Significant Accounting Policies (The following accounting poncies apply to me continuing operations of tne company.) Principles of Consolidation The accounts of all significant subsidiaries ot tne com pany are included in the consolidated finanoa1 state ments All significant intercompany transactions and balances nave been eliminated A wholly owned captive insurance subsidiary and the 50% ownership of a foreign chemical manufacturing company are carnec on tne equity metnoo Short-term Investments Snort-term investments are valued at cost wnich approxi mates market Inventories inventories are valued at me 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 Beginning in 1979. certain interest charges are capi talized as part of the cost of property, plant and equip ment additions See Note 2 of Notes to Consolidatea Financial Statements Dafarrad Incoma Taxas Deferred income taxes arise from reporting certain income ana expense items in tne financial statements m periods different from those in whicn sucn amounts are reported for income tax purposes Invastmant Tax Credits The company accounts for investment tax credits arising since January 1. 1971. as a reduction of the provision for United States income tax (tne flow-through method) investment tax credits which arose prior to that date were oeferreo ana amortized over me estimated service lives of the related assets Saia of Tax Benefits Tne company accounts for tne proceeds iron me sa.e : tax benefits (i e investment tax credits anq aeorec.a: c' oeductions) pursuant to me leasing provis oes o' me Economic Recovery Tax Act of 198` as pre-tax income See Note 5 of Notes to Consoiidatec Fmanc.ai Statements Ratiramant Plans The company ano ns subsidiaries nave retirement p.ans covering substantially all employees The company s policy is to accrue as expense an amount computed b, the actuary and to fund at least the minimum amount required by ERISA. See Note 9 of Notes to Consonoatec Financial Statements Earnings par Common Shara Primary earnings per common share are computed by divioing income (loss), adiusted for preferred stock dividena requirements, by me weighted average number of shares Of common stock outstanding during the year The computation assumes the exercise of outstanOing stock options to the extent tney are dilutive Fully diluted earnings per common share are computed' on the assumption (where the effect thereof wouio be dilutive) mat convertible securities outstanding nad beer convened into snares of common stock Appropriate adiustments for divioends on preferrea stock and interest on convertible notes (net of income tax effect) are maoe to earnings applicable to common stock for assumec conversions The computation also assumes the exerc.se of all dilutive stock options. GAp 22 Consolidated Statements of Income Yea' Enaeo Decembe' 31 Nat Salat Coats and Expanses Cost Of procucts S0!0 Distnbutior seilinq ana advertising Researcn ana aeveiooment General ana aammistrative interest (Note 2) Total Costs ana Exoenses Other Income (Charges} Provision tor plant shutdown costs (Note 3) Other--Net (Notes 4 & 5) Total Other income (Charges) Income (Loss) from Continuing Operations Before Income Taxes (Benefits) Income Taxes (Benefits) (Note 10) Income (Loss) from Continuing Operations Discontinued Segments (Note 1) Operating income. net of income tax benefits of $466,000 in 1980 ana $5 287.000 in 1979 Estimated Income (Loss) from disposition, net of income taxes (benefits) of $15.707.000 m 1981 and ($10,460,000) in 1980 Income (Loss) from Discontinued Segments Net Income (Loss) Weighted Average Number of Common and Common Equivalent Shares Outstanding Earnings per Common Share Drimary Continuing Discontinuec Net income (Loss; Fully Diluted (Note 6) Continjmg Discontnuea Net income (Loss) 1981 $672,514,000 i 980 S 677 216 OOC 551,893,000 74,844,000 8,110,000 39,117,000 19,153,000 693,117,000 524 897 OOC 73 213 000 8.634 000 42.843 000 21 634 000 671,221 000 (15,080,000) 2,644,000 (12,436,000) (33,039,000) (4,803,000) (28,236,000) -- 3 082.000 3.CS2.000 9.077.000 (1 246 000) '0.323 000 S6S3 CC2 51 8C5 OCC 6' -26 ZZZ ' 32J OCC 36 o'-s ::o u 30^ OCC* 62" `62 22. -- 15 93 COC : 5 9c 3001 40.586 0C0 '4 758 OOC 25 826 OOC 54,296,000 54,296,000 S 26,060,000 14,078,000 441,000 2 355.000 (244.240.000) (243.799 000) 5(233 476 000) _ 2 355 000 S 28 1 S3 000 13 497 000 13 386 000 S(2.24) 3.86 5 1.62 SI1.57) 3.07 S 1.50 S 50 118 07) Stl 7 571 -- -- -- S' 66 $ 33 S' 49 * -) S' c 2 Consolidated Statements of Retained Earnings Year Enoea December 3i 1981 980 Balance January 1 $ 53,609,000 S 30- 092 000 Net 'hcome (Lossi Less sasn c v-aencs 26,060,000 1233 475.COO, ='eierrec stocxiSi 20 per snare) 3,242,000 3 625 000 Common sicck !per snare 1981-$ 80. 1980-S 77 1973-3 66: 11,183,000 10 382 OOC Baian.ee Decembe'3". S 65,244,000 5 53 609 OOC See Summary of Signiticant Account ng Porcies anc Notes to Consolidated F nancia Statements * 9-9 S285 6'3 000 26 182 OOC 3 63d 300 9 062 300 53l* Or1- jl'O 23 AF 13193 CO COD Consolidated Balance Sheets DecemoerS1 Assets Current Assets Casn Snort-tern- investments Accounts receivable--trace less allowance for ooubtful accounts--1981 S2 828.000. 1980. $1.842.000 Accounts receivable--other (Note ^) Inventories-- net Fmisneo qooas Work m process Raw materials and suDDlies Total Inventories Prepaid expenses Assets of discontinued segments, at estimated net realizable value (Note 1) Total Current Assets 1981 S 10,385,000 2,963,000 78,106,000 70,014,000 87,169,000 24,121,000 36,428,000 147,718,000 4,806,000 23,272,000 337,264,000 S 13 342 000 8.593.000 80.638 000 6 681.000 54 735 000 16.410 000 32 477 000 103 622 000 4.123.000 265 723.000 482.722 000 Property, Plant and Equipment, at cost (Note 15) Land and land improvements Buildings and ouildmg eouipment Machinery ana eauipmeni Construction in progress Total Property. Plant and Equipment Less accumulated depreciation Property. Plan and Equipment--Net Cost in Excess of Net Assets Acquired 15,941,000 60,780,000 225,333,000 11,091,000 313,145,000 116,735,000 198,410,000 13 757.000 58.005.000 218.635.000 17 236 000 307.633.000 I07.6i6.000 200 0'7.000 5,744,000_____________ 5 744 QQQ Other Assets (Note 1) 20,342,000_____________ 9 800 000 Total Assets ________________________________________ $559,760,000$698.283 000 See Summary of Significant Accounting Policies anc Notes to Consonaatec Financial Statements GAF13194 2^ December 3i Uabilltio* and Shareholders' Equity Current Liabilities Notes payable INote 14) Current portion of lonq-term aebt (Note 14) Accounts payable Trace Other Accrued liabilities (Note i) income taxes payable Dotal Current Liabilities Long-term Debt Less Current Portion (Note 14| 1981 S 17,448,000 21,909,000 69,809,000 5,421,000 63.406,000 1,559,000 179,552,000 193,662,000 05,2 S 57 989 00C 45.463 OOC 85 20" OCC 8 825 OCC 127 865 OCC 5 3C7 000 33C.656 OOC 148 076 000 Other Liebiiities (Note 1) 51,859,000 97 204 000 Total Uabilltie* 428,073,000___________575 936.000 Commitments and Contingent Uabillties (Note 151 Shareholders* Equity (Note* 12,13 814)___________ Preferred stock $1 par value, authorized 6.000.000 snares. $1 20 convertible senes issued--1981. 2.611.784 snares 1980. 3 068 201 shares at assigned value o` Si 25 per share (liquidation value 1981 S69.723.060) Common stock Si par vaiue. authorized 25.000.000 snares issued--1981. 14.387.721 shares. 1980 13 817.202 shares Aoditionai paid-m capital Retained eamirgs "ora. Less siock nelc m treasury at cost Common--1981 2'i 467 shares 1980 236 887 snares Preterreo--76 400 shares m 1981 ano i960 Total Shareholders' Equity 3,255,000 14,388,000 34,360,000 65,244,000 137,257,000 1.638.000 932,000 134,667,000 Total Liabilities and Shareholders' Equity S559,760,000 See Summary of Sign.f.cant Accounting Poncies ana Notes to Consolidated Financial Statements 3 835.OOC 13.8'7 000 53.976 000 53 609 COO '25 237 000 t 958 000 932 000 122.347 OOC S698 283 033 GAF 13195 25 I Consolidated Statement* ot Changes in Financial Position* Year Enoeo Decemoer 3' 1981 Cash and Short-term Investments, beginning of year $ 21,935,000 Source (usei of Funas income (Loss) from Continuing Operations Charaes (erects) not affectmq tunas Depreciation Deferreo ncome taxes piant snutcown costs Otner Total from continuing operations income (Loss) from Discontinued Segments Charges (credits) to discontmuea segments not affecting funas Total from oiscontinued segments Total funds from operations Cash proceeds from sales of discontinued businesses Additions to property, plant and equipment Otner working capital items" (28,236,000) 20,728,000 (10,657,000) 15,080,000 6,437,000 3,352,000 54,296,000 (54,296,000) -- 3,352,000 107,496,000 (27,579,000) (54,619,000) Other Total source (use) before financing and investment activity (4,902,000) 23,750,000 Financing and investment activity Increase (decrease) in notes payable Increase m lonq-term debt Reductions in long-term debt Cash oividenas Other Total source (use) from financing ana investment activity (40,541,000) 74,282,000 (52,250,000) (14,425,000) 597,000 (32,337,000) increase (decrease) in cash and short-term investments Cash and Short-term Investments, end of year (8,587,000) S 13,348,000 980 S 19 078.000 ' C. "-Ti s 3'009::: 10.323 000 25 32e ccc 17 897.000 (329.000) -- -- 27.891 000 (243.799 000) 262.456 000 18.657.000 46.548.000 11.920.000 (48.154 000) (145.986.000) 124.448.000"' (11 224.000) 5 725 COO 2 6 -'000 -- -- 44 ) 70 000 2.355.C0C 13 465 OCC 15 320 000 59 990 OCC -- (58 804 000 (6 466.000 (5 2ii.DOC 1.10 49' 000 40.339.000 8,441.000 (21.294 000) (14 007.000) 602.000 ' 4 081 000 2.857 000 S 21 935 000 (5 958 OCC i 28 514 000 (18.967.OOCi (12.704 COO) i 675 000 ;7 440 00C (17 93` 000 $ 19.076 cc; 'Th s statement was cnanged m 1981 from the working caDital to the cash format in order to provide the reaoer with aetailec nformation on tne source and use of funds As a result, certain amounts for 1980 and 1979 have been restatec ' Otoer worKing capital items______________________________________________________ Accounts receivable--trade Accounts receivable--other inventories Preoaio expenses 5 2,532,000 (63,333,000) (44,096,000) (683,000) S 107,946.000 3.326.000 160.588.000 5.863 000 S (20 444 OCC 8 672 OCC 153 765 OCC i 084 -jC'_ income tax benefits Assets pi discontinued seqments Accounts eavabie Acc'ueo liabilities mcome taxes payable Net use -- 128,325,000 (18,802,000) (54,814,000) (3,748,000) 5(54,619,000) 256.000 (403 620.000! (AS 818 000) (4 834 000) 305 000 8(145.936 000) 4 '82 CCC 22 446 OCC 3C 7 7 OCC AS' OOC ' C9i co; S (6 466 CCC "'Consists primarily o` net property plant anc equipment transferred to assets cf discontinued segments See Summa'y of Significant Accounting Policies anc Notes to Consoiioaied Financial Statements GAP 13196 26 Notes to Consolidated Financial Statements 1 Discontinued Segments m 1980 the comoany oecicea to discontinue a number of busmesses including its reprograpnics. photographic grapnic arts proaucts. pictorial proaucts. resilient flooring ana certain other businesses Also mciuoeo in the discontinuance program was a latex plant, solo m December, i960, ano the company s x-ray film and reiateo cnemical businesses that were terminated m March. 1980 The pictorial products, graphic arts resilient flooring vinyl siding ana paper ano millboard businesses were sole in 1981 The reprograpnics business was sold on January 8.1982. effective as of December 31.1981. wnich substantially completes the program A receivable of $63 9 million relating to this sale is included in Accounts Receivable--Other In addition, long-term notes receiva ble of $14.5 million, relating to the sales of reprographics ana other discontinued businesses, are included in Other Assets As of December 31. 1980. a provision of $254 7 million ($244.2 million after tax benefits of $10.5 million) was recorded and consisted of a reserve for the loss on dis position of assets ana a liability for anticipated phase-out costs This reserve and liability were reevaluated in 1981 in connection with the sales of these businesses and determined to be more than needed to cover anticipated costs. The excess of $43 6 million (after taxes of $6 5 million) was restored to Estimated Income (Loss)from Disposition of discontinued segments Estimated Income (Loss) from discontinued segments also includes $10 7 million income (after taxes of $9 2 million), consisting primarily of pension reserves relating to 1977 discon tinuances no longer required (see also Note 9). Activity in this resen/e ano liability is summarized below p*ovs.on reco'aec in *980 Acl'V'ty Goring 1980 3aiance December 3' i960 Ac: .>; aoripc *96* AciwS:--en: ct Daiarce Ba'a^ce December 3i *98* Reserve Roc loss On DiSPOSitrOn of Assets liability For Phase*Ou Costs Dollars in Millions $127 0 $127 7 (1 0) 16 0) 126 0 121 7 (1*4 3) (30 3) 66 $ *.8 3 (56 7i $ 34 7 Toiai $254 7 (7 01 247 7 M 44 6) (SO '1 S S3 0 A: December 31 1981 the current port.on of the liability for pnase-oui costs :s $15 i million ano is inciuoec m Accrues Liabilities tne noncurrent portion of $19 6 mnhon is mciuoeo m Other L abilities Comparable current ano long-term amounts ai December 3' 1980 were $68 i million ano S53 6 million, respectively Operating income of me discontinued segments shows me resuits prior to me elective aates of tne Discontinu ances Operating results suosequent to the effective dates ot tne discontinuances nave been chargee to the laDmty for onase-out cosis Sales applicable to busi nesses discontinued during 1980 ano 1979 prior to me aates at which they were reoorteo as aiscontmuec we'e 5553 4 million for 1980 ana $529 5 million, for '979 The assets ot the discontmueo segments nave been reclassified, after the dates of tneir Discontinuances ;c remove them from tneir histone ciassificarons ano tc separately identify them at their net realizable value Tne amount of assets applicable to discontinued segmerts is presented below. December 3 Accounts Receivable--Nei Inventories ProDerTy Plant ana Eauipment--Net Other Total Assets Less reserve tor loss or OtSDOsmon of assets Totai Assets at Estimateo Net Realizable value Dc ars - M .crs 1981 ' S 13.8 5 5C 2 7.2 4c 5 18.0 3S : 2.6 25 0 41.6 18.3 S 23.3 39' " *26 2 5266 7 2 Interest Expense Interest expense for continuing operations for the years ended December 31.1981 i960 ano 1979 was deter mined as follows For the yea*- Total interest incurred Less interest captained interest expense Donars m Thousanos 1881 1980 *9'9 *21,371 $24 709 S16 992 2,218 3C75 2 685 819,153 S2`. 634 St4 307 3 Plant Shutdown Costs The company in December 1981 provided S15 1 million for felt mill shutdowns, primarily for the write-off of reiateo buildings ano equipment for certain felt mills m me building materials segment 4 Foreign Exchange Pre-tax foreign exchange gams (losses) on continuing opera lions are included in Other income (Chargesi as follows For tne vear Pre-tax Transiai'On Forward exchange contracts RavaDie'rece'vaDie Toiai Alter-tax Translation morwa'c exchange contracts avaDie receivac e Tot a. DO'iars m Ti-Qt-Sarcs 1861 *980 ?"? % 1,772 545 (1,151) S 1,166 S 86-' 633 i * *20; s * 3Sj 5 "oz 3 254 -C 5-4 269 $ 1,772 385 (511) % 1,647 5 ' 367 323 :e * o 5 : 530 s -65 ' 6"5 -a 5.2 422 Taxes reiateo to foreign exchange are nciucec " "come Taxes (Benefits) Generally results ot oaiar.ee sreet a"s'at'Ons are not tax eHecteo whereas me 'esu.'.s o' lom-am exchange contracts are subject to ia> GAF 13197 Notes to Consolidated Financial Statements (continued) 5 Other Income (Charges) The company recognized $2 0 million of income in 1981 as a result of the sale of tax benefits pursuant to the "safe harbor" leasing provisions of the Economic Recovery Tax Act of 1981 The net ooerating results of a wholly owned, captive insurance subsidiary and tne company's share of the net results of its 50% ownership in a foreign chemical manufacturing company are recorded m Other income (Charges) on me Consolidated Statements of Income Equity method results snowed losses of S606.000 and $966,000 in 1981 ano 1980, respectively, and income of $234 000 in 1979 Foreign exchange gains ano losses related to these investments are included w m a-c-^'s reported in Note 4 Incluaed m Other income (Charges' for me yea' "9TS s a loss of S5.966.000 on silver future transactions 6 P*r Share Information Fully dilutee earnings per share assume convener of me 5% and 5'/2% convertible subordinated notes anc me exercise of stock options into shares of common stock Assumed conversions for the 1980 net ioss cer S"are would have been anti-dilutive and nave ;here'ore oee" excluded 7 Schadule of Bualnaaa Sagmanta* Year Ended December 31 1981 Dollars in Millions 1980 1 Sales Chemical Less intersegment sales" Net Chemical Building Materials Consolidated Sales S325.4 24.6 300.8 371.7 $672.5 S308 2 23.8 284 4 392 8 $677 2 S29C 5 26 2 264 3 4*9 4 S663 ~ Direct Operating Profit (Loss) Chemical Building Materials Total Corporate and Interest Expenses S 56.6 (38.6) 18.0 (51.0) $ 52 0 13 7 65 7 (56 61 5 62 4 29 7 92 ' 5* 5' Income (Loss) from Continuing Operations Before income Taxes S (33.0) S 91 S 40 6 identifiable Assets Chemical Bunding Materials Photo & Reoro Corporate Assets of Discontinued Segments S200.6 222.4 -- 113.5 23.3 5190 4 200 5 -- 41 7 265 7 S1S2 5 343 5 239 0 65 5 - Total Assets S559.8 5698 3 $835 6 Aacmons to Property Plant and Eauioment Chemical Buiidinq Materials Pnoto & Reoro Corporate Total $ 12.2 14.0 1.4 S 27.6 S 21 9 23 9 -- 24 $46 2 $ '5 3 34 6 63 26 S 5c 0 Depreciation Cnemicai Building Materials Corporate To:a! $ 9.8 9.4 1.5 S 20.7 S 86 73 45 S i79 S 52 c 5 '5 'Statement of income information is presented for continuing operations Balance Sheet amounts for 1979 nave not ces^ restatec See Note 1 'intersegment sales are recoroea at me same prices charged to unaffiliatea customer intersegment sales ov the bji'cim materials segment were negligible 28 GAF 13198 8 Geographic Information* information with resoect to operations cy geographic area is as follows ffor the year 1981 Sales Less intergeographic sales"" Sales to Unaffiliateo Customers Direct Operating Profit Corporate and interest Expenses income (Loss) from Continuing Operations Before income Taxes identifiable Assets United States $635 3 26 4 608 9 61 502 5 Western Europe S 48 0 08 47 2 8.8 24 2 Dollars m Mi llions Eliminations Other anc Other Totai Consoiicatec $ 164 -- 16 4 31 98 $(27 2) (27 2) -- -- 23 3'" S672 5 -- 672 5 18 0 (5i 0! (33 O' 559 8 1980 Sales Less mtergeograohic sales" Sales to Unaffihated Customers Direct Operating Profit Corcorate ana interest Expenses income from Continuing Operations Before income Taxes Identifiable Assets $636 7 29.6 607 1 51 0 396 0 $ 67 5 124 55 1 125 28 8 $ 15.0 -- 150 22 78 $(42 0) (42.0) -- -- 265 7"" $677 2 -- 677.2 65 7 (56 6) 91 698 3 1979 Sales Less intergeograDhic sales" $648 8 27 7 $ 63 8 109 $ 97 -- $(38 6) (38 6) $683 7 -- Sales to Unaffiliateo Customers' 621 1 52 9 97 -- 683 7 Direct Operating Profit Corporate anc interest Expenses 75 4 15 7 10 -- 92 1 (5` 5i income from Continuing Operations Before income Taxes 40 6 centifiabie Assets 640 8 168 6 26 2 -- 835 6 "Geograpnic information is presented for continuing operations for information pertaining to the Statements of income Asset amounts for 1979 nave not been restated See Note i "'ntergeographic saiesare recorded at prices above cost, as negotiated between the operating units "Assets of discontinued segments at estimated net realizaoie vaiue See Note 9 Retirement Plans m June 1981, the company announced a change in the asset mix of tne employee pension funa as a result o` the restructuring program A aedcateo bona ponroiio with an assumec interest rate of return of 12% wnicn approximates me yeio to maturity on tne portfolio was estabiisnea ana wi" proviae income sufficient to meet tne actuarial oaicuiateo payments to ail retirees ana vested torme- employees mc uamg tnose o" tne aiscontmuec businesses At me same time tne company adoptee a i% increase n tne assumeo rate of return on p,an assets ano salary increases to 7% and 6% respectively `or plan participants These changes e'im natec tne ur'unoeo prior service cost. resuited 'n an over,unoea position fo- me value of vested bene'its anc generated an ac'uariai gam wmen is being amortizec over ten years Tne ef'ect was a decrease >n tne ioss from continuing operations tor 1931 of S7 500 000 without tax benefit or S 53 rimary-- Continuing Earnings oer Common Share Pnase-out costs accrued m connect on wm me '9" a'-p 1980 discontinuance programs mciuoeo amounts tor future person costs for wnicn tne 'ema ninq aggregate liability was $43.842.000 a; Oecem.be' 31 i960 Tne 29 GAF 13199 Notes to Consolidated Financial Statements (continued) company is no longer ooiigateo to fund any benefits re nting the'eto ana. accordingly the S43 842 000 balance less related taxes of $7747.000. was restored to Esti mated income from Disposition during 1981. or $2 56 Primary--Discontinued Earnings per Common Share The cost of employee retirement benefits for continuing operations was $2,347,000 in 1981. $9,806 000 in 1980 ana $8,613,000 in 1979 A comparison of the accumulated plan benefits and plan net assets for the company s do mestic defined benefit pians is presenteo below Actuarial present value ot accumulated pian benefits vested Non-vestec Total Plan assets avanapie for oenetits Assumed rate ot return Plan valuation dale Doars in Thousanas 1901 1980 1979 6172,666 ATM $171,753 $223,11$ 7% 1/1/$1 S227 609 10 303 $237 912 SI 79 479 6% 1/1/B0 S214 759 to 553 $225 312 si 51 743 6% 1/1/79 10 Incom* Taxes Provision has not Deen made for United States income taxes on unremitted earnings of foreign subsidiaries of S16.187.000, as it is managements intention to reinvest such earnings indefinitely Any United States taxes pay able on foreign earnings which may be remittee in the future are expected to be substantially reduced by the combined effects of a net operating loss carryforward and foreign tax credits United States income taxes nave not been proviaea on the unremittea earnings of the Domestic International Sales Corporation subsioiary aggregating S14.077.000 tnrough December 31.1981. since the com pany intends to postpone inaefimtely the remittance of Such earnings income (loss) from continuing operations before income taxes consists ot oomestic and foreign income (loss) as follows Ry tne year Domestic Foreign Tc:ai ireeme (loss) I'om Continuing Operations 3etore i~come Taxes Donars m Tnousanas INI i960 *979 5(44,0531 $(5 5721 $23 986 11,014 14 649 16 600 $433,03*1 $ 9 077 $40 586 The provision (benefit) for income taxes on continuing operations consists of the following pQr year Donars m Thcusanas INI i960 *97? jrvtec States--cjrren: S-- $|7 245. S 6 557 'Jr,tec States--aeierrec 110,657) 4 590 2 874 jntiec States investment tax crec is __ i4 579` ,2 022: Amerzator ot aeterrea jniiea States nvestme^' tax credits ar,sing cro* :c *9'* -- 432) (572: -OreiST-Cure-^reign--oeierrec Sta'e 5,554 __ 300 6 390 5 ` 25 ' 534 .257: t 544 Tcta1 Tccme Taxes ;6ere,;ts: $ (4,803) $, 246, $' 4 758 income taxes (benefits! on continuing ocera; c-s `o' :~e years 1981. 1980 ana 1979 were less man me ampjn-s computed by applying tne U 3 Peaera' statutory ncc~e tax rate to income before taxes Tne reasons `or mese differences are as follows For the year Dc-a* s *- '":,,sarcs 1081 '96C 9-o Tax (benefit) a: statutorv 'ate AoiuStrrents Operating loss cam/torwarc' 8(15,190) 5 L '6 5*5 6": 10,660 united States investment tax erec ts -- 5 ''' : 59- Domestic international Saies Corporation and Oecietion allowances (871) '94'. 942 Other--net 606 63* 524 Tota> income Taxes (Benefits) 8 14.003) Si' 2-6 j / ':c Amount reoresents oenetn o! Doo* operating icss to oe recegr ze; when realized lor income tax purooses The principal sources (uses) of United States deferred income taxes applicable to continuing ooerations were For the year Do*iars m Tnousanas 1M1 1980 '979 Tax depreciation over amount reporrec m Consolidated Statements of income $ -- $ 2 906 $ 1 960 Reversal ot lax effect of 1977 reserves Interest expense capitalized Foreign exenange translation Otner-net Total 16,147) --_ (1.5101 8110,667) -- ! 223 '29 330 S 4 590 -- 16' 1955, 682 S 2 574 For income tax reporting purposes operating loss carry forwards of approximately S116 million are avaiiaDie at December 31 1981. for offset against future consoiidateo taxapie income Approximately $92 million is applicable to tne united States ana the remamaer is applicable to consolidated subsidiaries locateo principally >n Western Europe The United States loss will oe avaiiace for future utilisation through 1996 and the foreign loss wni expire at various dates througn 1991 in addition Unitea States nvestment tax credit carryforwards of approximately S4 7 million are available tor otfset against future tax liabilities tnrough 1995 Use o' these carryforwards 'S oeoenoen: on future taxable income m :he United States anc Western Europe For 1979. the income tax oenefit on discontmuea opera tions includes $3 2 million resulting from a 1979 change in United Kmgaom tax laws related to inventories 11 Supplementary Financial Information Tne following expenses of continuing ooerations are nciudec m tne Conscidatec Statements of ircome .ne ve3r Ma ntenance ana 'epa.'s Ren. or ooe'at'rg -eases Dc-a'S r ~rc_,sa-cs 1801 *930 '9 "9 843,504 S42 43c $42 5- 8,120 -34_: -2 6-5 GAF 13200 12 Capital Stock The Si.20 convertible preferred stock aiviaenas on wnich are cumulative is convertible at any time into common stock at the rate of i '/ snares of common stock for each snare of orefe'rec Tne company may reoeem the pre ferred stock at S27 50 per share Transactions in common stock held m treasury were as totows Conars in Tnousancs 1M1 *980 1979 Baiarce January 51,935 S2 682 S 4 53' Repurchase oi '05 :00 snakes ir 198* i0 600 snares m '980 ana 3 500 shares -r. 1979 pursuant to the siock purchase plan 61 19 issuance tro-- treasury of 130 530 sraresmi90i 97.500 shares m *98C arc 2-16 920 snares rn 1979 hn con nection w tn safes unoer tne stock option oiar anc tne restricted stock purchase pian) Balance Decemce13t (3) (7851 n 868) $1,030 $ 958 $ 2 662 As a result of the above issuance of treasury shares additional paid-in capital increased $276,000 m 1981 and decreased S123 000 and $174,000 in 1980 and 1979. respectively The snares of common stock reserved for issuance at December 31.1981 and 1980 were as follows Reserved *o* 1*01 '980 Conve'S'CnofSl 20 convert Die O'eterrec Stock 3,2*4,730 3 835 25' Co^ve'Sion of conven'D'e suDoranatec notes Exe'C'Se y,naef stoc* cor.on anc Ow'crase p:ans To;a 415,523 824,530 4,504,003 44' 0**6 169 370 5 445 667 During 1981 456 417 shares of preferred stock, assigned vaiue cf $570,521 were converted into 570 519 shares of common stock curing 1980. 37 476 snares Of preferred stock, assigned value of $46,845 were converted into 46 843 shares cf common stock, during 1979 90 snares of preferred stock were convened into 112 shares of common stock 13 Stock Option and Stock Purchase Plans Tre comoarys stock option plans provide for tne granting c< options to kev employees to purchase common stock of the company at .not less mar. 100% of the fair market value at me oate of grant Uncer tne terms of the 1975 nona jahfiec pian options ter 800 000 snares of common stock may oe grantee during a ten-yea- pence e~c rg February 11. 1985 Options grantee :c date are exe-: sac s one year after grant ana expire after "0 years ~ne o a~ provides for stock appreciation nents wnere-n ar opt holaer may reouest' surrence- of me opt on r exchange `or payment tm casn or stock) cv ms companv c` -~e difference between the option ano marke; prices o- me oate of surrenaer The reouesteo surrenaer of a- oc: cn may be grantee or denied at the discretion o- the companys Stock Option Committee Authority to grant options under tne 1965 auanf>ec p an expired on March 31 1975 Options graneo jnaer m.;s plan expiree five years from the date of grant Transactions affecting options unper mese piars are as follows NwrrDer of Snares ** ` aC c 0c* or P' Outstanding January i '979 Granec Exe'cisea ana surrenaerea Te-'finaiea Outstanding Decempe' 3' i979 Grantee Exercsec Te-mmatea Distancing DecemDer 3- '980 G'antec E*erc seo Te,rn'na*ed Ojtstar-ci-g Decer-oe-31 ' 98- 4Q3 900 317 000 (89 130 ' ' 3 100) 613 670 32 000 \2l 500i ; i s soc 612670 99 000 .76 020' i6' 500: 574 `50 5 9 6J 3C 9 60 '0 29 '0 46 50 0 25 9 5~ o =: ' 4 =6 '0 64 2 j 39 Of tne total options outstanding at Decembe' 3' 498' 1980 and 1979 respectively 488 650 480 670 ana 305 670 were exercisable Options for 82.00G. "9 500 ano 238 000 snares were available *or grant at Decemoe31.1981 1980 ano 1979 respectively under me provisions of the company s 1969 restricted are unrestricted stock pu'enase plan 650 000 snares of co~mon stock were authorized for sale to kev employees me plat" currently provides mat restnctec anc unrestricted snares may be soio at prices wnicn are not less man 53% ana 80% resoectiveiy of me closing marke: pr.ee ceceomg the cate of grant ijnpe'cena'h concitios lre cmpanv nas the right to repurchase restnctec sna-es o` common stock at tne original semng p-:ce The excess cf a joteo market value a: me cate of gran: over tne aggregate sales puce `o- resmctec snares see s amort,zea by charges to income ever me 'esfictec oenoo As a resjit of tnese c~a-ges acait ona1 pam-n capital nas been increased by 5108 000 S'99 000 anc S-38 00Cm<98- 1980 anc'979 respectively Tne caance tc be amch zee through '989 amcuTec to S902 000 S' '83 000 ano S'C12 000 at December 3` '98' '350 ano 19'9 respectively 31 GAF 13201 Notes to Consolidated Financial Statements (continued) 14 Debt and Dividend Restrictions mo-manon regaromg snon-ierm oedt for ;ne years rgTg.iggi s Donars -r Trcjsancs INI '960 '979 ic Dece^oe' 3' 3a arce s-isiarc.rg Average -'e'es: `ae =c ~e vea* Average srer-te'^ cec oestareng srexe'm cec cutstarc-rg at a^v mon:r-enc Average inte'es: rate $17,44# 5 57 989 S' 7 650 16.9% 19 2". '2 ?: *39,316 S 95 39? 55! 446 993,997 *30 73' $76 883 16.2% 12 7% H 5*c Tne average amount outstanding during the period was computed by dividing the total of the monthly outstanding orincipai balances by 12. The average interest rate for the year was computed using the weighted average interest rate on outstanding balances at each montn-end Long-term debt at December 31.1981 and 1980 was as fotows Doi-ars m Thousanos 1 Ml 1980 9 -:o ser'Or notes Cue Marcn 31 ^907 with arn^ai scneaJeo ormcioai reDaymerts 9 93,700 S 60.500 8`;% sen.or notes cue January 15 1992 with annual scneouieo onncDai repayments 22,100 35.300 Revolving crecit agreement 72^00 -- 57?*o SiHKing lunc cebenijres Cue Decemoer 1 1987 with annua; sinning tyra oayments of S2 50C OOO cue on each Decemoer 1 The caiarceat Decen-oer31 '98i wasnetof S2C 334 00C ne.c m treasury when may be -sea *o accommocate lulure sin*mg tunc *eaji*emen:s z r3--" r.g `rQrri ir,$n cannS 4,666 -- 15 902 2! 055 "a*-e*emDi mausna revenue ocnos wh cn bear 'rie'es: a: faies ot 4% :c 7Vi% anc mature at va* cus cates :o 2004 22,927 23 490 5^2 Do^veno'e s-oo'o-natea noies aue Adm * 994 *.tn oDt'ona'ar.nLa feoayments oegmao' ' *990 a^oo 6 200 5 -c6 conve't b e sybeoratea notes cue Apm * 963 -v m oc ona; annual 'eDaymenis of ettner 520C 0C0 or eacr Aci ' th'oug* 1962 anc the caancec`S' 267 000 oavab'e Agn: <983 Qf i dj OOC cavaoie on Aor' * 1982 ana the ca.ance c S?3A 000 payable on Agm ' 1983 1,467 2 200 o'es a**' cear va- o-s mte^est 'ates arc -na'-'e a* ca:es to `993 6,770 0 83A Cc-game's-"cer cac ta 'eases See Note `5' 13.241 16 058 Z-a 215,971 93 559 -ess co*' c~ 21,909 45 463 cec ess ccer' cz^'cr *193,662 S'Ac C~6 "ne 5b ccnvertioie subordinated notes are convert die ntc sha_es or common stock at any time ar a conversion cnee of S22 50 oer snare isubiect to artianution aaiustments m spec'iieo c-.-cjmstances) The 5>:% conveniD'e suborcmatec notes are currenrv convertible into snares of common siock at a ccnve-s.c~ price of $28 72 per snare (sutec: to a-iianution adjustments m specitiec circumstances; oniy n connec' G" wim certain prepayments All ctner conversion nemts acsec in '976 Cash reauirements to meet maturing 'org-te'm oeot obligations over the next five years are presentee oe-ow Dept of $72 5 million incurred unaer the revow ng ;recu' agreement has been included m the '983 amo-nt casee upon its term 1982 S21.909.000 1983 $95,866,000 1984 $20 635.000 1985 S'0 302 C0C 1986 $10 028 000 To provipe for its working capital neeos during tne discon tinuance Digram oescriped m Note 1. the company in tne first Quarter 1981 enterec into a $225,000,000 revolving credit agreement, terminating December 31. 1983 witr a group of banks This agreement, which replaced the companys aomestic short-term lines of credit in effect at December 31 1980. provides for a declining availability of credit over its term The company, effective OctoDer 20 1981. exercised its right permanently to reduce the ag gregate commitments of the banks under this credit agreement to $170.000.000 and further reoucec tne com mitments to $120,000,000 m January 1982 Interest on the funds is at the prime rate Unper the agreement a commit ment fee of 7: of 1% per annum: is charged on the daily average unused portion of the commitments ana a facility fee o* 7: of 1 % per annum is cnargea on the commitments whetne' used or unused The agreement contains provis ons whicn among otner things, require tne mainte nance of minimum working capital ana net worm, limit me amount of deot and capital expenoitures ana ccncitior tie availability o' .oans on ach-eving certain financial results projectec tor tne discontinuance program The company is currently negotiatmg to replace me above agreement w th a new long-term revolving cecit agreement for $75 million Also in the first quarter 1981 mere oecame effective amenpments negotiated m connection with tne cisco-nnuance program to certain other long-term oebt nst'_ments Jnoer tne amenomenis me scheaulea p-moca payments were acce-eratea -estnctions reia'mg :c : v cenas debt leases ana maintenance of workirg capita were restructured ana a new provis.on i-mting -ne com pany s investments was nsecea GAF 13202 Diviaenas are restrictea unaer ;he aDove ana certain otne' loan agreements including the revolving credit agreement Unaer the most restrictive of these provi sions S5 320 000 of retainea earnings were available at December 31. 1981 for future dividends In March 1982 tne company obtained waivers from certain holders of its long-term debt relating to the restrictions on dividends Unaer the terms of tne waivers the company may de clare and pay dividends on its common and preferred stock for tne second quarter of 1982 Discussions are under way with the banks for a new long-term revolving credit agreement pursuant to which the company could declare further dividends IS Commitments and Contingent Liabilities Capitalized leases for continuing operations of $9,291.000 and $9,769,000 are included in Property, Plant and Equip ment-Net at December 31,1981 and 1980, respectively. The present value of future net minimum lease payments is reflected as long-term debt (see Note 14) The most significant capital lease is for the administrative headquarters located in Wayne. N.J. The amortization ex pense associated with assets recorded under capital leases is included in depreciation expense..The company aiso has operating leases for transportation and data processing equipment and for other buildings Future minimum lease payments for continuing properties held under long-term noncancelable leases as of Decem ber 31 1981 are as follows Minimum Payments Dollars m Tnousaros Capita! Leases Operating Leases 1982 1983 '984 1965 1986 laie' Years Toiai minimum oayments Less inte'est incuoec aoove 5'eseni vaiue of net m n.mum 'ease cav-ments S i 864 1 802 1 739 1 677 1 614 3 273 21 969 8 728 S13241 S 6.346 2 980 1.4T6 404 13' 281 Si 1 558 fne company had commitments of approximately Si 1 612 000 at Decemoer 31.1981, for tne acquisition of property plant anc equipment for its continuing operations At December 31. 1981 there were various pending lawsuits ana ciaims against the company relating to matters arising `rom its business m the opinion of management, the ulti mate opposition of suen matters will not have a material aoverse effect on the companys consolidated financial position Auditors' Opinion Ddoitte Haskjns Sells TO the SHAREHOLDERS AND BOARD of D"REC~C=S OF GAF CORPORATION We nave examined the consolloatec balance snee's o' GAF Corporation anc its consoiioatec suDsicianes as of December 31.1981 ana i960 ana tne reiateo co^sc; dateo statements of income, retainea eanirgs anc changes in financial position for eacn of tne three yea's m the period ended December 31 1981 Ourexamra; ors were made in accordance with generally accectea add ing standaras and. accordingly, mciuaeo suen tests cthe accounting records ana such atner auaitmg pro cedures as we considered necessary in tne circum stances in our report dated February 12.1981. our opinion on tne 1980 consolidated financial statements was qualifiec as being subiect to tne effects of any adiustments which might result upon consummation of the company s plan of Disposal of certain of its operations As explained m Note 1 to the financial statements, tne companys Discon tinuance program was substantially completed ounne 1981 and portions of the reserve for loss on oispost on of assets and of the liability for phase-out costs established during 1980 but no longer considered necessary nave been restored to income in 1981 Accordingly, our pres ent opinion on the 1980 consohoateo financial siaiements. as expressed herein is different from mat expressed in our previous report In our opinion, such consolioated financial stateme--s present fairly the financial positior of the companies at December 31. 1981 ano 1980 ana the results of me ' ooerations and the changes m their financial position toeacn of me three years in tne period enaeo December 3' 1981. m conformity with generally acceorec accoj'inc principles consistently appneo (ktritti A/ New Yot* New YorK 10048 February 9 1982 GAF 13203 Supplementary Data (Unaudited) Financial Reporting and Changing Prices ;n accordance with the Fmanc.ai Accounting Standards Board Statement Nc 33 ' Financial Reporting and Chang ing Prices the following supplementary information is presented to reflect the estimateo impact of inflation on the comparys earnings from continuing operations The companys historical cost 'manciai data nave Deen adiustec for the effects of genera: inflation on inventories and property, plant ano equipment (constant dollar basis) and for the effects of changes m specific prices on those assets (cur rent cos; basis) As a result, tne impact on net income only reflects aoiustments to depreciation expense ano cost of products solo Sales ano other costs ano expenses, in ducing income taxes, have not been adiusted The management of GAF cautions the reader in interpret ing this supplementary data cue to the required use of numerous assumptions and estimates m preparing the in formation This data should therefore be construed only as indicators of the effects of inflation as opposed to precise measurements Constant Dollar Information Constant dollar accounting is a method of reporting financial data in collars having an equal (i.e. constant) general purchasing power As required, this information has been compiled by adiusting the historical costs of inventories and property, plant and equipment for changes in the Consumer Price inoex for All Urban Consumers Current Cost Information The current cost method adiusts historical costs of the company's inventories and property, plant and equipment to reflect changes in specific prices (current cost) of pro ducing those same inventories or replacing the assets at the balance sheet date Plant and equipment current costs were estimated by adjusting historical costs by externally generated industrial price indexes, inventory costs were developed using current manufacturing costs Inventory costs included in the Cost of Products Sold were deter mined on average current costs during the year Under both methods, depreciation expense was adjusted based on the restated asset values using the same esti mated useful lives ano depreciation rates used m the primary financial statements Other Information Reflecting the adverse impact of inflation, the adjusted earnings unoer both the constant dollar and current cost methods are lower than the results from continuing opera tions reported m tne primary financial statements However, it should be noted that the guidelines estab lished by Statement No 33 specify that tne gam from tne decline in purchasing power of net monetary iiab-iit es ~e : curing tne year (S2" 7 million) may net be aggregate the adjusted earnings This gam ar ses because cu'^g 198"! the company had more liabilities which were fixec r amount of dollars to be repaid tnar it nao assets sim.iar'-. fixed in amount of dollars to oe received Whne this unre alized gain does not represent dollars wnicn will pe received in the future, it does represent an .mponant hedge against inflation, as this net monetary iiaoiiitv posi tion will be paid m dollars which nave a lower ou'cnas ng power than the dollars originally received n return for --e obligations. Consolidated Statement of Income from Continuing Operations Adjusted for Changing Prices (Unauoiteci For the year ended December 31 198- (Dollars in Thousands) As Reponea n tne rhimary Statements (H-stoncai Cost) Ac,u$;ec for Genera' inffaron (Constant Ooiiar) Net Sales Cost of Prooucts Sole 111 S672 5M 534,259 $672 514 544 579 Depreciation 20 728 33 64' Other Expenses 131 413 31 4i3 interest income Tax Benefit 19 153 (4 803) 19 '53 14 803> 700 750 723 983 Loss Irom Continuing Operations $ ,'28 236! S<5* 4691 Purchasing power gam on net monetary liabilities heio ourmg the vear S 21 73a Aaiusteo (O'Charges r Spec 1 c ces (CjnerCost1 5672 5'4 540 056 3543- 4*:* 9-5: 4 =:: -r 259 sue -45 S 2- 734 increase <n specific prices (Current cost) of inventories anc property plant ano equipment neio Ounng the year 121 $ '2 704 Effect o< mcrease ir me general price ieve' increase m specie cnees oe' (unaer) effect of mcrease m he general price ieve< 3' '? 5(24 4=' 01 Exciuaes$i7 634 oepreoation expense mc'uaec m C os; of =,,cc.c:s So'o n me primal financial sta'ements (2) The estimatec current cost of P*openy Plant anc Ecu .pprer: -- \eano inventories was $295.230ana $153 8"i resoeo e'y a: Decemoe'31 *98i GAF 13204 34 Comparison of Selected Supplementary Fmanc.ai Data Aciustec 'or Effects of Changing Prices fm Average '98' Dollars: (Dollars mThousanos. except per snare catai 1981 1980 1979 '978 '9" Net Sales 8672,514 S747.443 $856 737 3848 962 historical cost intornaiion aoiustea for general inflation income (Loss! 'rom ccnhnumg operations 8(51,469) $ ('3.690) 5 9 118 income iLoss J per common snare 8 (3.88) S (i 02) $ 68 Net assets at vear-ena 8229,202 S242.941 $625 839 Cur-e"" cost mrormanon me: - rLoss) from continuing operations 8 (48,745) S (16 102) S 4 602 income (Lossi oer common share 8 (3.69) $ n 19) S 34 increase m specific pnees of inventory ana property over (unoer) effect of increase m tne general price level 8 (24,487) $ 1 063 $ 1 7 036 Net assets at year-ena 5231,881 $250.111 $675,984 Otner aata. aoiustea for general inflation Purcnasmg power gam on net monetary liaDilities nelo during the year________________________________> 21,734 S 30.400 $ 27.826 Diviaenas pet common snare 5 .80 $ .85 $ 85 $ 89 S 90 Year-ena market once per common snare 513.91 $14 10 $12 00 $15 94 Si5 92 Average Consumer Price inaex 27X4 246 8 21 7 4 195 4 181 5 Quarterly Financial Data Dollars in Millions 1981 by Quartar FIrat Sacond Third Fourth First 1980 by Quanei Second Thiro Fourth Net Saies Cost of Proaucts Sold Gross Profit income (Loss) from Continuing Operations Before income Taxes (Benefits)(See Note3! income Taxes (Benefits) income (Loss! from Continuing Operations income (Loss) from Discontinued Segments Net of income Taxes (Bene'its! Net income (Loss! Earrings per Common Snare ' 5176.7 139.5 8 37.2 8 4.4 1.3 XI 0.8 8 3.9 8174.1 135.0 S 39.1 8 6.0 1.7 4.3 0.6 5 4.9 8177.5 149.4 8 28.1 8144.2 128.0 8 16.2 8 (3.8) 8 (39.6) 1.3 (9.1) (5.1) (30.5) 19.3 33.6 8 14.2 8 3.1 $1620 120 1 $ 41.9 Si59 8 121 4 S 38 4 S182 7 141 8 S 40 9 S 172 7 ' 14* 6 S 3- - $ 100 34 66 S i8 03 15 $ 52 10 42 S (7 9: :5 S; (2 Q; 54 S 120 (4 8) S (3 3) :o 2i (244 2) S 4 0 Si 246 2 i Primary Dollars Continuing 8 .16 8 .25 S (.41) 8 (XI9) $ 42 S 04 S 24 3 i 2': DiSCOntmueO Net mcome (Loss'; .06 .04 1.35 2.35 8 .22 5 .29 $ .94 8 .16 4C S 82 i 35) 1 0" 116 0 s ! 3') $ 23 sms 22 rul'y Dilutee Continuing Discontinues Net income (Loss; * 8 .25 * (.27) 5(1.70) * .03 1.08 1.88 * 8 .28 8 .81 8 .18 $ 36 31 $ 69 *' *' "in acccoance with tne orovisions of APB Opm ion No 15 earnings per share are calculated separately tor each qu arte* anc me annual penoa Accoramgiy annual earnings per snare wil1 not necessarily eoual the totai of the mtenm penoas "Figure omittea--net ciutive See Note 6 of Notes to Conscncatec Financial Statements 35 GAF 13205 CAF' Chemicals resins tor adhesives and coatings, a latex heat sen sitizer. ano nonmigrating piastrcizer Monome's. polymers co Intormodiatos and polymers. solvents ana Solvents organic mtermeaiaies Per'vea BLO' solvent for agricultura from acetylene for use <n cos ano lithographic applica metic petroleum, pnarma- tions. Butanecioi rnter- ceuticai. piast/c textue adhe meaiate tor 'hermoptastics sive. ana other maustnes chain extenaer for ure Monomers 2-Pyrol - monomer for nylonhke linear polymer, solvent ana intermediate solubilize' for drug-actives V-Pyrol* comonomer ana modifier for adhesives coatings, fibers etc Intermediate Alkyl vinyl ethers monomers for co polymers, intermediates thanes. Butenediol inter mediate for pharmaceutical ana agricultural chemical synthesis. Butynedioi agri cultural intermediate, corro sion inhibitor. M-Pyrol' sol vent for aromatic extraction of lube oils, hign tempera ture plastics synthesis. Methylamines reactive chemicals for pesticides, pharmaceuti Vinytpyrroiidonc Polymers cals. detergents: N-Substituteo pyrroiidones for formu Polyvinylpyrrolidone (PVP) lating purifying, or process- for cosmetics, aanesives. ng of coatings, drugs, dyes detergents coatmgs. paper plastics, etc Propargyi al texti e specialty uses Piasaone' cohol intermediate for agri pnarmaceutica! tablet binaer cultural ano pharmaceutical ana coating agent Piasdone* chemical synthesis, corro C excipient for miectaoies. sion inhibitor Tetrahycro- biooa plasma expanaer furan for magnetic tape Poivciar1 AT stabilizer for coatmgs reaction synthesis beer wme vmecar, juice PVC pipe cements, vinyl Poiypiascone XL tablet ois- coatings ntegrart tor oharn-aceut- ca s Ganex ' polymers for pigmert dispersion as pro tective co.ioias cosmetic ao- Complex cyclic ana aliphatic aitwes PvP'VA copolymers compounds tor use as active ; im 'c'mers for aanesives cosmetics etc Poiectron' ingreo/ents and as mtermea'ates in the dye. pnarmaceuti- e u is on coooiymer a cai agricultural ana chemi emoe' stabilizer ooacifier cal processing industries, to' .-arcus uses Gafauaf COPO yme'S tor Skin- anc carpony! iron powders iron pentacaroonyt na-'-ca-e procucts Vinyl Ether Polymer* Gantrez ` AN coDOiymers tor acnesive aetergen: pnotograpiic textue applications. Tnicxerer L ana IN tor pamts Surfactant Intermediates Nonylpnenoi Oodecyipnenol Sodium isetnonate Sarco- sme N-Methyltaunne anc omer atex systems Carbonyl Iron Powders Gartrez ' S resins `or raod M.croscooic-s.ze spheres coio-wate' soLbii ty used n oe- containing as hign as 99 5o tergerts Gantrez - S resms metamc iron used in VHP tor cosmetics coatings ana u'HF circuitry transmit pr,arm,aceuticais Gantrez`M ters receivers, raaar ab sorbing components anc m powaer metallurgy Iron Pentacarbonyl A technical grace better than 99 5% pure for use as starting material for chemi cally pure iron reagent m preparation of oxides, iightsensitive photochemical antiknock agent for gasoline and diesel fuel, catalyst m hydrocarbon synthesis, in termediate in manufacture of chemically useful reagent complexes. Processing and formulating agents, including bacteri cides. coating and finishing agents, adhesive additives. seauestrants. antistatic agents lubricants, and solvents for use in various maustnes agricultural chemicals, oil held chemicals, textile chemicals Antioxidant Uvi-Nox! primary antioxi dant for polyolefins mono mer inhibitor Antlstats for Plasties Gafac - phosphate esters for PVC. polyolefins poly styrene Biocides Biopai! loaopnors toroetergent-sanitizers Corrosion Inhibitors Butoxyne * 497 for acid pick ling. electroplating, specialty applications Katapone' W-328 corrosion mmbitor for steel copper aluminum Also for petroleum processing drilling, acidizing Lubricants Antara" extreme-pressure add.tives for metalworking flues Sequestrents Cneeiox * seauestrants chel ate trace metal impurities in textue processing leather eye ing oaper crocess ~c `iQuid soaps anc s-amcccs stabilize rubbe' lat ces a~c agncuitu'ai cnem ca1 e1". . sons seaueste' cac v" iron copoer mac"=s.-~ ' ' etc m narc wate' anc .ve: processing. Textile Auxiliaries Ganex oete'gems toe" suppressants em js.t ers leveling agents pm; paste thickener katanoi ove ca-ner `or pressure avemg O' aisperse-oyeapie poiyeste' Katapo1' VP-532 retaroer fo' canonic ayes Perega avemg, leveling, striping assis tants. SoliOogen aye fixing agent for airect ana aeve oped ayes Other Specialty Chemicals Biancoi' dispersant ana peptizing agent for pigments clays, ana other solids n ca per agricultural chemicals lances Gafamiae" CDD-5'6 foam stabilizer for iiauiO dish washing products arycieanmg heavy-duty detergents Gatgara" raciat'on-cu'abie coatings Nomcnic. anionic ano cat ionic surface-active agents to' use as detergents emu'sr.'.s's dispersants anc wetmg agenrs. Nonionics Antarox surfactants towtoammg nouseho'd anc inajstnal aete'gents Emuipnogene' emuisif-e's foaming -ignt- or -.eavvdu'v detergents latex staDmze'S Emuipnor dispersants emulsifiers antistats textue tooricants 'geoai1 suractants for cnemcai ana mermat stability m text le ana paper processing 'vc'oca'Don ana agricuitura erem,ca emulsification ce:e,pen' comoounamg. emutS'Cn polymerization etc 36 GAF 13206 Anionics Anca;' hign-foammg oetergents for housenoia prod ucts static control primary emuis ficanon Antara* luC"cants ano corrosion mniD tcrs m oil- o' water-baseo sys tems Gafac' aetergents and ernysifiers witn antistatic luDncating. oeoustmg. anticor rosion properries. igeoonr aetergents wetting agents ano dispersants. bom nigbano icrw-foammg ana compatiDie witn soaps useo m textile ana nara surface oetergency ana m formulating cosmetics ano agricultural chemicals Nekai* wetting agents for paper textile, pamt, ink applications Cationic Katapoi f water-soluble emul sifiers. for mineral oils ano agricultural chemicals, antipnecipitants ana textile levei-ng agents, antistat ano lubri cant for woo1 and synthetic tiper processing Pciybutyiene terepntnatate IPB7) thermoplastic molding compounds tor automoDiie. mecnamcal and electrical cans eiectncait electronic components appliance noosings and Pusmess mach'nes Tharmoplastlc Polyastars Gaf'ie- urre'.ntorced ana giass-'emtorcea 3BT com pounds Gafite' LW low-warp P5~ compounos tromimpactmodifieo moa-remforceo mater.a's to giass liber,mica compinancns Gaftuf- higrimpact BT compouncs m giass-remforceo anc unremorceo graces Natural ana ceramic-colored mineral granules in a variety of screen gtadmgs and caliprated colors tor rooting and otneruses men tillers BUILDING MATERIALS OAF1 Building Product* Prepared Roofing Complete line of premium organic ana glass fiber seifsealmg asphalt shingles Asphalt Roofing Shingles Timberiine* premium asphalt shingles, ranpom butt oesign. earth-tone colors. Timberime* Class A glass fiber shingles, for extra safety ana long life. Sentinel'" Class A glass fiber shingles, fire ano wina resistant. Standard self sealing shingles rugged with classic sauare-tab design Fine Guard* Class A heavy weight twin-tab shingles Sovereign* shingles, heavy weight twin-tab aesign, TiteOn* locking sningies. Distinc tive basketweave pattern Nor easier* strip shingles no cut-outs total aoubie coverage Supurban1 TwinTabs ' shingles in classic sauare-butt style, sweeping appearance Roll Roofing Smooth-surfaced roll roofing mineral-surfaced roil rocfmg combines utility ana econ omy with fire-resisting duali ties and attractive coiors Dubl-Coverage" mineralized roil roofing provides doupietnick protection Built-up Roofing Systems Products for not-aopued aophcation including organicand glass mat-oasea roofing membranes asphalts ce ments and coatings MmeraiSnieid* coid-appiied built-up rooting system accessories Roofing Mombranos Air-Vent* aspnat-saturated felts. Combination flashing glass-nemforceo Gafgiasflashing: Universal base sheet organic coated Dctn sides for use on asphalt roofs ana over pourea gypsum wood fiber decks roof in sulation. a vapor netaraer for above-deck insulation Strata-Ply * roofing felts for three-ply roofs Glass Mat-baaod Products Gafgias * type 3 & 4 light weight ply sheets. Gafgias * asphalt-coated base and ply sneet. Gafgias * mineral-sur faced cap sheet: Gafgias' Stratavent* pertorateo vent ply. vented glass-base felt. Gafgias* Stratavent * vent ply for nailabie decks venting giass-base felt Camants and Coatings Jetbiak'" Flashtite* cement, an asphalt plastic cement for built-up roofing flashing. Alu minum coating, reflective, for smooth-surface roofs, metal and masonry surfaces Mica Weatherguard* coating ano Weather Coat * asonait emul sion for smooth-surface roofs Minoral-Shioid* Built-up Roofing A time-proven, coid-apolieo built-up roofing system com bining mooem application techniques ano specially for mulated roofing orocucts Prooucts include MmeralSnield! rooting membrane mastic, granules anc alumi num mastic Accessories Gaflex" expanson ;om: covers Vent stacks to retease moisture trapped in built-up roofs Insulation Products Insulation orooucts 'cr Cw ' ijo roofing applicate's rcc insulation fasteners ouito-~g insulation Roof Insulation Gaftemp* urethane msuiat.on Doara for use where men re-mai value is paramount Gaftemp' uretnane-oemte insulation proviaes mgr, in sulating efficiency combined wit" rated fire resistance Gaftemp* perlite insulation board combines thermal insulation with pimensional stability. Gaftemp* isotherm insulation is Factory Mutual Class I fire rated for insuiatec steel deck assemblies Gaftite* roof insulation fas teners provide maximum wina uplift resistance SERVICES Building Supply Confers Distribution outlets tor GAF builoing matena'S anc allied prooucts Chomicsls Custom manufacture ot phar maceutical agricuitura1 anc other specialty cnemicais m Developmental ano commer cial Quantities 3' GAF 13207 GAF Locations Corporate Offices 140 West 5' Street New York NY 1002C 212-621-5000 CHEMICAL Alabama Huntsville California Irvine Illinois Lombard Kentucky Calvert City Maryland Hagerstown Missouri Annapolis New Jersey Bound Brook Linden North Carolina Charlotte Pennsylvania Blue Ridge Summit Texas Seadrift Texas City Wisconsin Pembine BUILDING MATERIALS 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 New Jersey Gloucester City South Bound Brook New York Buffalo Syracuse North Carolina Charlotte Pennsylvania Erie King of Prussia South Carolina Chester Tennessee Memphis Texas Dallas Virginia Norfolk Springfield CORPORATE New Jersey Wayne New York New York Domestic Subsidiaries GAF Broadcasting Company inc New York N Y GAF Export CorDOration New York N Y Caroima Puerto Rico GAF Hawaii Inc Honolulu Hawan GAF International Corporation New York N Y Australia MelDourne Sydney Austria Vienna Belgium Smt-Nikiaas Brazil Sao Pauto Canada Mississauga Danmark Virum Finland Helsinki France Louvres Great Britain Com brook Manchester Greece Athens Israel Te- Aviv Italy Mnan Japan Tokyo Mexico Mexico City The Netherlands Delft New Zealand Auckianc Norway Oslo Singapore Singapore South Africa Johannesburg Spain Barcelona Sweden S:ockno:m Switzerland Zjg West Germany -recne n Affiliate: GAF'Huls Chemie GmbH Mari West Ger.ma~. GAF 13208