SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

Commission File No. 333-72321

BGF Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware

2221

56-1600845

(State of incorporation)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)


3802 Robert Porcher Way, Greensboro, North Carolina		27410
(Address of registrants’ principal executive office)		(Zip Code)

(336) 545-0011

(Registrants’ telephone number, including area code)

Securities registered pursuant to Sections 12(b) or 12(g) of the Act: None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. Yes x No ¨

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

There is no established trading market for the Common Stock of the registrant. All shares of Common Stock are held by an affiliate of the registrant at March 28, 2005.

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 1,000 shares of common stock, $1.00 par value, as of March 28, 2005.

EXPLANATORY NOTE

This amendment to BGF Industries, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004 is being filed to correct clerical errors contained in the “Products and Markets” section of Part I, Item 1 of the Form 10-K.

Except for the modification of “Products and Markets” in Item 1, this Form 10-K/A does not modify or update other disclosures in the Form 10-K, including the nature and character of those disclosures, to reflect events occurring after the filing date of the Form 10-K. The entirety of Part I, Item 1, as amended, is included in this Form 10-K/A.

PART I

Item 1. Business

General

Our business focuses on the production of value-added specialty woven and non-woven materials made from glass, carbon, and aramid fibers. In both revenue and market share, we believe we are the second largest manufacturer of glass fiber fabrics in North America and a leading producer of other high performance fabrics and value-added parts. Our materials are a critical component in the production of a variety of products finding their way into such markets as filtration, advanced composites, ballistics, thermal insulation, electronics, and construction. Our products bring to our customers many desirable features such as flame resistance, dimensional stability, tensile strength, ballistic properties, and thermal and acoustical insulation. In the course of our normal operations, we are engaged in various related party transactions. See item 13 for further clarification.

BGF is a Delaware corporation and is an indirect, wholly owned subsidiary of Porcher Industries, S.A. Our headquarters are located at 3802 Robert Porcher Way, Greensboro, North Carolina, 27410, and our telephone number is (336) 545-0011. Our website address is http://www.bgf.com. Our website also provides a link to reports and other documents that we file or furnish with the Securities and Exchange Commission.

Limited Number of Domestic Producers. We are one of a limited number of major domestic manufacturers of glass fiber fabrics. Our major competitors in the global glass fabric weaving industry are Hexcel, Nitto Boseki (Japan), Nan Ya Plastics (Taiwan) and Taiwan Glass (Taiwan). We and Hexcel are the primary manufacturers based in the United States. Direct imports of glass fiber fabrics into the U.S. have been increasing and the relocation of a large segment of the electronics industry to Asia has impacted demand for domestically produced glass fiber fabrics used in printed circuit boards.

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

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

•

Printed circuit boards

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Helicopter blades

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Telecommunications equipment

•

Filtration bags

•

Roofing materials

•

Heat shields

•

Wall coverings

•

Welding curtains

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Aircraft laminates

•

Sporting goods

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Automotive insulation

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

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

Business Strategy

Our goal is to be the preferred supplier to markets that require a technically complex application of fabrics and nonwoven products made of glass, carbon and aramid yarns. To achieve this goal, we intend to pursue the following long-term strategies:

Capitalize on the Continued Growth of the Filtration and Composites Markets. We believe substantial opportunities exist to increase our sales and market share in both the filtration and composites markets. We intend to leverage our already strong position in the high temperature filtration market by developing new woven and non-woven high performance fabrics for environmental applications in power generation, steel mills and other industries that are subject to strict environmental regulations. In addition, we believe that there may be increased opportunities internationally in this market as lesser-developed countries adopt stricter environmental regulations. We also believe that we have substantial opportunities to increase our sales in the composites market for applications in the transportation industry. In the composites market, we are pursuing strategic relationships with key suppliers to the aerospace and automobile industries for the design and manufacture of new products.

Expand our Value-Added Production of Insulation Products. From our base as a manufacturer of non-woven fiberglass materials, we have introduced a number of value-added products that provide thermal and/or acoustical insulation properties. These products are being utilized in the automotive exhaust and appliance markets. We believe these markets offer excellent growth potential. We plan to continue to expand our capabilities in these processes to provide the required solutions for our customers.

Expand Market Share in the Protective Markets. In 2004, we entered into the production of materials for protection of personnel and vehicles from ballistic threats. This is a natural outgrowth of our manufacturing expertise with fiber glass and aramid fibers. We have successfully supplied materials that are used to produce rigid armor such as that used to protect military vehicles. We have also begun to supply materials for personal body armor. Demand has been quite strong due to the needs of the military, but we see this area as an ongoing growth opportunity for homeland security as well.

Focus on Profitable Lightweight Fabrics for the Multi-Layer Printed Circuit Board Market. We seek to supply lightweight, specialty fabrics for the multi-layer printed circuit board market. Our internal strategy is to produce the highest quality, most technically challenging materials. In addition, we have the capability to supplement our production with material produced at Porcher Industries’ Asian affiliate.

Develop New Applications for Fabrics. We plan to continue to leverage the technical expertise and experience of our research and development and sales and marketing staff to develop new applications for existing fabrics and to develop new fabrics that meet customer requirements for strength, weight, fire resistance and durability. We believe that many opportunities exist to continue to develop both woven and non-woven fabrics to replace traditional materials in markets which have historically not utilized the fabrics we produce.

Products and Markets

We sell our products primarily in the United States and focus on the following markets:

Commercial. Our glass fiber fabrics are used in commercial applications where fire resistance and dimensional stability are critical. Applications for these products include ceiling tile and acoustical facing fabrics, window coverings and movie screens. Sales of our commercial fabrics were $9.3 million and $9.4 million in 2004 and 2003. These sales represented 5.8% and 7.5% of our net sales in 2004 and 2003, respectively. Sales of commercial products has remained consistent from 2003 to 2004.

Composites. Our glass, carbon and aramid fiber fabrics are used in various applications, including structural aircraft parts and interiors. Net sales of fabrics for composites were $48.0 million in 2004 and $42.3 million in 2003. These sales represented 30.8% and 33.8% of our net sales in 2004 and 2003, respectively. This increase is the result of market share gains and increased activity in commercial and civil aviation.

Construction. The fire resistant qualities of glass fiber fabrics make them a critical component of products used in the construction industry. Applications for these products include smoke and fire barrier curtains, drywall bonding tape, rubber mat backing and fabric structures, such as commercial tents and roofs. Sales of our construction fabrics were $8.6 million and $3.8 million in 2004 and 2003, respectively. These sales represented 5.5% and 3.0% of our net sales in 2004 and 2003, respectively. The increase in sales of construction products is due to a new product introduction, which brings improved performance to the customer product line.

Electronics. We produce glass fiber fabrics for multi-layer and rigid printed circuit boards for use in the electronics industry. Sales of glass fabrics to the electronics industry were $33.8 million in 2004 and $31.0 million in 2003. These sales represented 21.7% and 24.8% of our net sales in 2004 and 2003, respectively. The increase in sales of our electronics products reflects an increase in market demand in 2004 from abnormally low demand in 2003.

Filtration. We produce fabrics for high temperature dust filtration used by industrial customers to control emissions into the environment. Our filtration bags are sold to utilities, producers of asphalt and carbon black, cement plants and steel mills. Sales of our filtration fabrics were $28.7 million in 2004 and $27.3 million in 2003. These sales represented 18.3% and 21.8% of our net sales in 2004 and 2003, respectively. The increase in sales of filtration fabrics is due to a specific large utility project.

Insulation. We produce materials for high-temperature, fire-resistant insulation. Applications for these products include insulation for joints, pipes, valves, transportation exhaust systems, heat shields and home appliances. Sales of our insulation fabrics and parts were $15.5 million and $9.6 million in 2004 and 2003. These sales represented 10.0% and 7.6% of our net sales in 2004 and 2003, respectively. The increase in sales of insulation fabrics is due primarily to the development and sale of new products.

Protective. We produce protective fabrics that are used in various ballistics applications such as armored vehicles and personal protective armor. This is a new product line for us. Sales of our protective fabrics were $11.9 million in 2004 and $1.8 million in 2003, and represented 7.6% of our net sales in 2004 and 1.5% in 2003.

Sales and Marketing

We sell our products through an experienced direct sales force of six field sales representatives, three market managers and one inside sales representatives. Our sales representatives have specific customer groups, while the market managers are responsible for specific product lines. The sales representatives are compensated on a salary and commission basis and the market managers are compensated on a salary and

bonus basis. Each sales representative has a technical orientation and the necessary expertise to sell our full line of products. We maintain an internet web site, located at http://www.bgf.com, which contains extensive product information, as well as a comprehensive B2B capability for our major customers.

We have over 400 customers, including many leading companies in their respective industry segments, including Cytec Engineered Materials, Delphi Energy, GE Energy (formerly BHA), 3M Company, Ohio Armor, Saint Gobain, and W. L. Gore and Associates. We continually seek to strengthen and expand our relationships with our customers. Due to the stringent quality, delivery and performance standards demanded by many of our customers and the ultimate users of our products in various markets, our customers are increasingly moving toward collaborative agreements among fabric producers, such as BGF, and their own customers. We believe that we are well positioned to benefit from this trend because of our strong competitive position within the industry, our investment in technical and manufacturing expertise and our long-term relationships with customers and suppliers. Our markets remain competitive, however, and this competitiveness is exemplified by continual and rapid technological change. To effectively compete, we must effectively process and utilize extensive technological and manufacturing capabilities. We could face further competition if cost effective alternatives to glass, carbon or aramid fiber fabrics are developed.

One of our customers, Cytec Engineered Materials, accounted for 14.4% and 17.0% of our net sales in 2004 and 2003, respectively. Our top ten customers in 2004 and in 2003 accounted for 42.1% and 44.7% of our net sales, respectively. Our customers are not contractually required to purchase any of our products and may terminate their relationship with us at any time.

Industry Segments

We operate in one business segment that manufactures specialty woven and nonwoven fabrics for use in a variety of industrial and commercial applications. The nature of the markets, products, production processes and distribution methods are similar for substantially all of our products.

Research and Development

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

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Applications and development;

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Pilot processing;

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Physical testing;

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Composites development;

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Microscopy;

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Analytical testing; and

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Filtration technology

We have several United States patents, patent applications and trademarks. While we consider our patents to be valuable assets, we do not believe that our competitive position is dependent on patent protection or that our operations are dependent on any individual patent or group of related patents. However, in some instances, patents and patent protection may serve as a barrier to entry in some of our product lines, such as commercial and insulation. Our policy is to obtain patents on our new products and enforce our patent rights.

Raw Materials

The principal materials we use to manufacture our products are glass, aramid and carbon yarns. We purchase yarns from AGY, Inc., Cytec Carbon Fibers, Dupont Company and PPG Industries. AGY, Inc. (“AGY”) is an affiliated company. AGY filed for protection under Chapter 11 of the US Bankruptcy Code

on December 10, 2002. On April 2, 2004, AGY emerged from bankruptcy. We have not experienced any interruptions in our supply of materials from AGY. As part of AGY’s reorganization, AGY’s glass yarn operation at our South Hill lightweight fabrics facility was closed effective September 30, 2004 and our supply agreement with AGY, relating to this facility, was terminated. The closing of this facility has not affected our raw material supply. Porcher Industries, which owns BGF through NVH, Inc., a US holding company, previously owned a 51% interest in AGY. In conjunction with AGY’s emergence from bankruptcy in April 2004, Porcher Industries indirectly received a 15% interest in the newly emerged AGY entity, AGY Holding Corp., in exchange for entering into a supply agreement with AGY Holding Corp. through December 31, 2006. The supply agreement provides BGF with an economic incentive, but not an obligation, to purchase yarn from AGY. Currently, our main suppliers of carbon yarns are Toray, Toho and Cytec Carbon Fibers and our main supplier of aramid yarns is DuPont.

Employees

As of December 31, 2004, we employed approximately 880 full time and part time employees, 707 of which are hourly employees and 173 of which are paid on a salary basis. All of our employees are located in the United States. None of our employees are represented by a labor union. As part of our restructuring plan, we closed our South Hill heavyweight fabrics facility, effective October 1, 2002, and consolidated operations into our newly constructed South Hill multilayer facility to reduce excess capacity. This resulted in a reduction of our wage and salary workforce by approximately 10% in 2002. We incurred a pre-tax restructuring charge of $0.3 million in August 2002 related to severance payments to the employees at this facility.

During the first quarter of 2005, we eliminated nine salary positions at our South Hill lightweight fabrics facility, which will result in the payment of approximately $0.4 million of non-recurring severance costs in the second quarter of 2005.

Environmental and Health Matters

We are engaged in an Environmental Protection Agency (“EPA”)-supervised Voluntary Remediation Program at our Altavista facility, to address reportable quantities of polychlorinated biphenyls (“PCBs”) discovered during a 1998 environmental site assessment at the former site of a heat transfer oil tank that the previous owner of the facility had removed before BGF’s 1988 acquisition. A 1998 Phase Two Environmental Site Assessment revealed PCB contamination in several areas inside the plant and on its roof, in the soil, in the sanitary and storm sewers within the plant, and in the surface waters to which the storm sewers drain. In addition, testing confirmed that measurable quantities of PCBs may have migrated into the City of Altavista’s water treatment plant.

In 2003, we submitted to the EPA a final Site Characterization Report (“SCR”) documenting the assessment of the BGF property and the creek that drains from the property. In May 2004, the EPA approved the SCR and described acceptable steps for a multi-phased clean-up of the site. We are in the process of drafting a two-phase clean-up plan, consistent with the EPA’s directions. In 2004, we submitted to the EPA a draft plan for Phase I, addressing cleanup around the site. We are currently developing revisions to the Phase I plan and expect to submit an updated plan to the EPA in mid-2005. We will submit a plan for Phase II, addressing the creek areas, after receiving EPA approval for the Phase I cleanup plan. At this time, we are unable to determine if there will be a financial impact on us – that is different from our current established reserves.

A 1998 Phase Two Environmental Site Assessment at our Cheraw, South Carolina facility revealed reportable levels of chlorinated solvents and hydrocarbons in soil and groundwater. The contamination resulted from the previous owner’s printing operations. Assessment and cleanup are regulated by South Carolina’s DHEC, which notified us that the chlorinated solvent residuals constitute the sole remediation concern. With DHEC oversight and approval, we are pursuing a Monitored Natural Attenuation strategy, which includes periodic groundwater monitoring. Recent tests show reduced levels of solvent concentrations.

As of December 31, 2004 and December 31, 2003, we had reserves of $2.7 million for environmental exposure. The reserves reflect the estimated remediation costs for the Altavista facility, as obtained from the environmental consulting firm that conducted the site assessment and submitted the SCR to the EPA. Remediation costs are estimates, subject to the EPA’s approval of a remediation plan and to other factors that may arise in the remediation process. Estimated remediation costs at the Cheraw facility are $0.4 million, which also is reflected in the reserve.

As the cleanup progresses, we may need to revise these reserves but we are unable to derive a more precise estimate at this time, as actual costs remain uncertain. We do not anticipate significant cash outflows associated with this liability in the next twelve months, as we must await the EPA’s approval of the final remediation plan. However, there can be no assurance that we will not be required to respond to our environmental issues on a more immediate basis and that such response, if required, will not result in significant cash outlays that would have a material adverse effect on our financial condition.

PART IV

Item 15. Exhibits and Financial Statement Schedules

EXHIBITS


Exhibit No.		Description of Exhibit
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on April 8, 2005.


BGF INDUSTRIES, INC.

By:		/s/ Philippe R. Dorier
		Philippe R. Dorier
		Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

BGF INDUSTRIES INC 10-K/A