ATLANTA, Feb. 1 -- Georgia-Pacific Corp. today reported full-year 2004 net income of $623 million ($2.37 diluted earnings per share), which was more than double net income of $254 million ($1.01 diluted earnings per share) for 2003. Full-year 2004 net income was $771 million ($2.93 diluted earnings per share) before $128 million in unusual items. Full-year 2003 net income was $349 million ($1.39 diluted earnings per share) before $95 million in unusual items and an accounting change. Fourth quarter 2004 net income was $16 million (6 cents diluted earnings per share) compared with net income of $31 million (12 cents diluted earnings per share) for the same period of 2003. Fourth quarter 2004 net income was $134 million (51 cents diluted earnings per share) before $118 million in unusual items. Fourth quarter 2003 net income was $132 million (52 cents diluted earnings per share) before $101 million in unusual items. "This has been an outstanding year for Georgia-Pacific. We've successfully implemented our consumer products strategy, posted record profits in our structural panels business and saw improving conditions in our packaging and papers businesses," said A.D. "Pete" Correll, chairman and chief executive officer of Georgia-Pacific. The company normally reports on a 13-week quarter and a 52-week year. The company's 2003 fiscal fourth quarter and year had 14 weeks and 53 weeks, respectively. Net sales for the year 2004 were $19.7 billion, equal to $19.7 billion in 2003 sales. Excluding sales of the building products distribution business, which was sold in May 2004, net sales for 2004 increased $1.8 billion or 11 percent from 2003. Full-year 2004 included the following unusual items: - A pretax charge of $159 million ($100 million after tax, or 38 cents per diluted share) consisting of an increase of $48 million to add the tenth year to the company's asbestos reserve, a $109 million increase in reserves for its asbestos defense spending through 2014 (which averages $11 million per year before tax benefits) and a net $2 million reduction of its asbestos insurance receivables; - A gain of $92 million ($39 million after tax, or 16 cents diluted earnings per share) on non-strategic asset sales; - A pretax charge of $74 million ($46 million after tax, or 18 cents diluted loss per share) for the early extinguishment of debt; - A pretax charge of $76 million ($47 million after tax, or 18 cents diluted loss per share) for asset impairment and restructuring primarily related to the Bellingham, Wash., facility which has been sold to the Port of Bellingham; and severance and restructuring costs at the Green Bay (Broadway) facility in Wisconsin and the South San Francisco, Calif., packaging facility; and - A pretax credit of $9 million ($6 million after tax, or 2 cents per diluted share) from an increase in an insurance receivable related to an environmental remediation site in the North America consumer products business unit. Income for the full year 2004 also included $123 million ($77 million after tax, or 29 cents diluted loss per share) in stock-based compensation costs. For the full year 2003, stock-based compensation was $48 million ($30 million after tax, or 12 cents diluted loss per share). For the year 2004, cash provided by operations was $1.5 billion, including $533 million in the fourth quarter. The company made capital expenditures for property, plant and equipment of $713 million during 2004, with $265 million spent in the fourth quarter. In 2003, cash provided by operations was $1.8 billion, and capital expenditures totaled $710 million. For the full year 2004, debt was reduced nearly $2 billion or 18 percent to $8.7 billion, including $217 million in the fourth quarter. Net sales for the fourth quarter 2004 were $4.5 billion and increased $130 million or 3 percent compared with the 2003 fourth quarter, excluding sales from the building products distribution business. Net sales for both quarters exclude results from the non-integrated pulp facilities, which have been sold and are reported as discontinued operations. In addition, net income for fourth quarter 2004 included $27 million ($17 million after tax, or 6 cents diluted loss per share) in stock-based compensation expense. For fourth quarter 2003, stock-based compensation expense was also $27 million ($17 million after tax, or 7 cents diluted loss per share). The quarter's results include $30 million (11 cents per share) from favorable changes in the status of tax audits and foreign tax rate changes. Details on unusual items for business unit operating profit are included in the "Reconciliation of Operating Profit Before Unusual Items" Tables at the end of the release. North America Consumer Products The North America consumer products segment includes the company's retail and commercial tissue businesses. Familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So-Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) disposable tableware business. The segment recorded full-year 2004 operating profit before unusual items of $730 million, up 19 percent compared with an operating profit before unusual items of $616 million for the previous year. Operating profit in 2004 was $698 million and included a net charge of $32 million for unusual items including severance, equipment relocation, facility sales and environmental reserve adjustments. Operating profit in 2003 was $601 million and included a net charge of $15 million for unusual items including environmental reserve adjustments, asset impairments, employee separation and machine closure costs. The segment recorded a fourth quarter 2004 operating profit before unusual items of $227 million, up 57 percent versus operating profit before unusual items of $145 million in the fourth quarter 2003. The fourth quarter 2004 operating profit was $222 million and included a net charge of $5 million for unusual items including asset impairments and environmental reserve adjustments. Fourth quarter 2003 operating profit was $167 million and included a net gain of $22 million for unusual items including asset impairments, employee separation, machine closure costs and environmental reserves. "Full-year operating profit before unusual items increased 19 percent over 2003 primarily due to the successful implementation of our strategy to improve and separate our brands, and to improve our returns," said Correll. "Gains in efficiency, improvements in distribution and product rationalization helped offset inflation. "Our progress is very encouraging and our strategy is clearly working. Compared to the fourth quarter of last year, our revenues in this segment are up 3 percent while earnings are up 57 percent." International Consumer Products The international consumer products segment markets both retail and commercial products such as bathroom and facial tissue, handkerchiefs and paper towels as well as tabletop products for foodservice in Europe and other locations. Market-leading brands include Lotus(R), Moltonel(R), Colhogar(R), Tenderly(R) and Delica(R). The segment recorded full-year 2004 operating profit before unusual items of $178 million, compared with an operating profit before unusual items of $175 million for 2003. Operating profit in 2004 was $174 million and included a net charge of $4 million for unusual items for severance costs and a fire at the company's Russian facility. Operating profit in 2003 was $160 million and included a net charge of $15 million in unusual items primarily for severance costs. The segment recorded a fourth quarter 2004 operating profit before unusual items of $42 million versus operating profit before unusual items of $52 million in the fourth quarter 2003. The fourth quarter 2004 operating profit was $39 million and included a net charge of $3 million for unusual items including severance costs. Fourth quarter 2003 operating profit was $37 million and included a net charge of $15 million of unusual items primarily for severance costs. The currency exchange rate between the U.S. dollar and the Euro benefited this year's fourth quarter results by approximately $3 million and benefited full-year 2004 results by $17 million. "Our continued cost reduction initiatives in Europe helped maintain our competitive position by offsetting lower prices and inflation," Correll said. Packaging Georgia-Pacific's packaging segment includes four containerboard manufacturing facilities and 55 converting operations. Its Color-Box subsidiary is the largest litho-laminated corrugated manufacturer in North America. The segment recorded a full-year 2004 operating profit before unusual items of $282 million, compared with an operating profit before unusual items of $277 million for the previous year. Operating profit in 2004 was $304 million and included a net gain of $22 million for unusual items for asset sales, severance and equipment relocation related to the asset sales. Full- year 2003 operating profit was $345 million and included a net gain of $68 million on asset sales, including the sale of railroad operations. The segment recorded a fourth quarter 2004 operating profit before unusual items of $72 million versus $59 million in the fourth quarter 2003. Fourth quarter 2004 operating profit was $77 million and included a pretax gain of $5 million for asset sales. The fourth quarter 2003 operating profit was $109 million and included a $50 million pretax gain on the sale of railroad operations. "Full-year 2004 operating profits in packaging were up over the same period in 2003. Increasing fiber and energy costs as well as maintenance spending were offset by improved pricing," Correll said. "Fourth quarter 2004 volume was down somewhat versus a year ago, primarily as a result of there being one week less in fourth quarter 2004." Bleached Pulp and Paper The bleached pulp and paper segment is comprised of the company's bleached board and communication papers businesses as well as its 38.9 percent minority ownership in Unisource. The segment recorded a full-year 2004 operating profit before unusual items of $26 million, compared with an operating profit before unusual items of $8 million for the previous year. Operating profit in 2004 was $51 million and included a net gain of $25 million primarily related to the sale of the company's interest in Brazilian pulp operations. The operating loss in 2003 was $48 million and included a net charge of $56 million in unusual items for asset impairment. The segment recorded a fourth quarter 2004 operating profit before unusual items of $23 million versus a loss before unusual items of $1 million in the fourth quarter 2003. In fourth quarter 2004, operating profit was $24 million and included a net gain of $1 million for a machine closure and a $4 million operating loss from the company's equity investment in Unisource. The fourth quarter 2003 operating loss was $8 million and included a net charge of $7 million primarily for a machine closure, and a $4 million operating loss from the equity investment in Unisource. "Year over year, we've executed a solid turn-around in these businesses with price increases and cost reduction initiatives across all grades," Correll said. Building Products Manufacturing The building products manufacturing segment includes the company's structural panels, gypsum, lumber, industrial wood products and chemical manufacturing businesses. The segment recorded a full-year 2004 operating profit before unusual items of $1.01 billion, compared with an operating profit before unusual items of $418 million for the previous year. Operating profit in 2004 was $997 million and included a net charge of $14 million for unusual items including facility sales, closures and severance costs. Operating profit in 2003 was $378 million and included a net charge of $40 million for unusual items primarily for asset impairments, employee separation and facility closure costs. The segment recorded a fourth quarter 2004 operating profit before unusual items of $101 million versus operating profit before unusual items of $206 million in the fourth quarter 2003. Fourth quarter 2004 operating profit was $86 million and included a net charge of $15 million for unusual items including asset impairments. Fourth quarter 2003 operating profit was $200 million and included a net charge of $6 million primarily for asset impairments and facility closure costs. "Strong demand drove record profits in structural panels and resulted in the second highest year of profits for our building products business. Plywood and oriented strand board prices were up 23 percent and 28 percent from 2003, while lumber prices were up 15 percent," Correll said. "Housing permits for October and November averaged 15 percent higher than the same period in 2003, indicating that residential demand remains strong along with improving commercial conditions." Building Products Distribution In May 2004, Georgia-Pacific finalized the previously announced sale of its building products distribution business to BlueLinx Holdings, Inc. In connection with the sale, Georgia-Pacific entered into a six-year agreement with this company to continue to sell it structural panels, lumber and other building products manufactured by Georgia-Pacific. The building products distribution business reported an operating profit of $111 million through the May 7 sale date, compared with $98 million for the full year in 2003. Other The company's Other segment primarily includes unallocated corporate expenses and the elimination of intersegment profit. For the year 2004, this segment reported a loss before unusual items of $480 million compared with a loss before unusual items of $315 million for the same period of 2003. The operating loss in 2004 was $711 million and included total pretax charges of $231 million for unusual items including additions to the company's asbestos reserves, the early extinguishment of debt and gains on asset sales. The operating loss in 2003 was $282 million and included a $33 million credit for unusual items primarily for litigation, monetization of a portion of the asbestos insurance receivable and pension settlement costs. The segment also experienced higher costs for stock-based compensation, incentive compensation, information technology, and employee and retiree benefits. The segment reported a fourth-quarter 2004 operating loss before unusual items of $149 million compared with a loss before unusual items of $102 million for the same period of 2003. The fourth quarter 2004 operating loss was $329 million and included pretax charges of $180 million of unusual items for additions to the company's asbestos reserves and the early extinguishment of debt. The fourth quarter 2003 operating loss was $137 million and included $35 million of unusual items for pretax charges for asbestos costs, net of anticipated insurance recoveries, litigation settlement costs and costs to monetize a portion of its asbestos insurance receivable. The segment also experienced higher costs related to incentive compensation, information technology and foreign currency translation. Discontinued Operations In May, the company finalized the sale of its non-integrated pulp operations. These operations reported net losses of $3 million through the May 7 sale date in 2004 and $98 million for the full year 2003. The fourth quarter 2003 net loss was $106 million due to a goodwill impairment charge. Summary "We are very pleased with our 2004 results. In 2005 we will continue to deliver on our promise to improve our financial strength and flexibility, and increase value for our shareholders by reducing debt, maximizing cash flow and improving returns on capital," Correll concluded.