G-P Sees Positive Numbers

Georgia-Pacific Corp. reported second quarter income from continuing operations before unusual items of $104 million compared with second quarter 2001 income from continuing operations before unusual items and goodwill amortization of $134 million.

The company's 2002 operating results reflect new Financial Accounting Standards Board rules under which companies are no longer permitted to amortize goodwill. For second quarter 2001, goodwill amortization totaled $62 million.

Including unusual items, income from continuing operations for second quarter 2002 was $87 million. This compares with income from continuing operations of $29 million for the same quarter a year ago, which included a one-time charge of $67 million associated with plant closures and indefinite curtailments in the company's commodity gypsum wallboard business and $62 million of goodwill amortization expense.

Total sales for G-P in second quarter 2002 were $6.2 billion compared with $6.6 billion in second quarter 2001, which included results from pulp and paper assets that were sold to Domtar Inc. in the third quarter 2001. The company's earnings before income taxes, depreciation, amortization and unusual items from continuing operations were $644 million in second quarter 2002 compared with $774 million in second quarter 2001. The company's debt was $12.1 billion at the second quarter's end, compared with $12.2 billion at the end of the first quarter of this year.

The company's consumer products segment recorded a second quarter 2002 operating profit of $279 million compared with an operating profit of $214 million for second quarter last year. Its consumer products segment includes its retail and away-from-home tissue businesses in North America and Europe, and the Dixie disposable tableware business in North America.

The packaging segment reported an operating profit of $93 million in second quarter 2002 versus $103 million in second quarter 2001.

The bleached pulp and paper segment reported break-even operating results for second quarter 2002 compared with a $37 million operating profit (or $50 million excluding goodwill amortization) for second quarter 2001. This segment includes the company's pulp, communication papers and Unisource paper distribution businesses.

The company's building products segment recorded a second quarter 2002 operating profit of $88 million compared with $69 million a year ago.

For the first half of 2002, income from continuing operations before unusual items was $174 million compared with income from continuing operations before unusual items and goodwill amortization of $111 million for the same period a year ago. Income from continuing operations was $148 million versus a loss from continuing operations of $107 million for the same period last year.

"We are pleased to see a substantial improvement in our consumer products segment over the second quarter of last year," said A.D. Correll, chairman and chief executive officer. "This business continues to benefit from the achievement of post-acquisition synergies, and also saw a strong seasonal pickup from first quarter 2002 levels in our away-from-home tissue and Dixie businesses.

"Despite a slight decline in the average price of boxes, the packaging business improved profitability from the first quarter 2002. Excluding volumes from our Color-Box business, which was acquired in the third quarter 2001, second quarter box shipments were 6 percent higher than in the same period a year ago. Cost reductions also contributed to our strong performance relative to the industry.

"Increased pulp shipments in the second quarter improved profitability for that business. However, results from paper and paper distribution declined from the first quarter this year, due to weakness in the commercial printing industry and offset the improvements in the pulp business.

"Cyclically low prices continue to affect our building products segment results. Despite the seasonal spike in housing construction activity, wood products prices actually declined during the quarter due to continued over- capacity in the industry. In contrast, prices for gypsum wallboard increased from first quarter levels.

"The third quarter outlook for our consumer products segment is positive for all three domestic businesses. Our European business is also performing well and we will continue working to protect profit margins in the face of rising fiber prices.

"In our packaging business, we are encouraged by improved demand and will continue our cost improvement efforts to maximize our returns in this difficult business environment. We also are more optimistic regarding our pulp and paper business with recent price increases beginning to take effect.