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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

EXCHANGE ACT OF 1934

For the Fiscal Year Ended January 1, 2005

Commission File Number 1-3506

GEORGIA-PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

133 Peachtree Street, N.E.,

Atlanta, Georgia 30303

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (404) 652-4000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:    None

Indicate by check mark whether the registrant: (1) has 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 registrant was required to file such reports), and (2) has 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 registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ¨

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on July 2, 2004 (assuming, for the sole purpose of this calculation that all executive officers and directors of the registrant are “affiliates”) was $9,117,926,678 for Georgia-Pacific Common Stock.

As of the close of business on February 23, 2005, the registrant had 259,808,325 shares of Georgia-Pacific Common Stock outstanding.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of Georgia-Pacific Corporation’s definitive Proxy Statement for use in connection with its Annual Meeting of Shareholders, scheduled to be held on May 3, 2005, are incorporated by reference in answer to Part III of this Form 10-K.

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GEORGIA-PACIFIC CORPORATION

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended January 1, 2005

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PART I

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PART I

ITEM 1.    BUSINESS

Georgia-Pacific Corporation was organized in 1927 under the laws of the State of Georgia and is headquartered in Atlanta, Georgia.

We are engaged in four principal businesses:

Our four principal businesses are reported in six operating segments:

Strategy and Recent Developments

During the past several years, we have been pursuing a strategy of improving our return to shareholders by focusing on higher value-added products. We began implementing this strategy by acquiring and investing in businesses that position us closer to the consumer, and by selling and exiting non-strategic businesses. Our acquisition of Fort James Corporation in 2000 was a key component of this strategy and provided us a leadership position in the higher value-added consumer tissue business. Recent asset sales have reduced our exposure to cyclical businesses, such as office papers and market pulp, while providing additional cash to reduce debt.

In addition to these acquisitions and divestitures, we have focused our traditional businesses—containerboard and packaging, building products, and bleached paper—on emphasizing products and services that are differentiated from those of our competitors and, we believe, preferred by consumers. In all of our business lines, we continue to focus on our relationships with large mass, or “big box”, retailers.

We continue to execute our financial strategy while at the same time maintaining our strict operating discipline. We believe the result of this determined focus ultimately will improve our financial flexibility by allowing us to achieve investment grade financial metrics and improving our return on capital.

We have engaged in a number of transactions intended to further these strategies:

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Consumer Products

North America

Tissue.    With an estimated 30% volume market share at the end of 2004, we are the largest producer of tissue products in North America. Our strategy in this business is to improve operating margins through product improvements and enhancements that lead to preference for our brands and through leverage of our size to achieve operating and distribution efficiencies. This business produces bath and facial tissue, paper towels and napkins, which are made from both virgin and recycled fibers. Our products are sold under our brands and customer brands in both retail and commercial channels. Fourteen tissue production and converting facilities located throughout the United States and two converting facilities in Mexico produce finished goods to serve the North America market; these facilities have nine of the world’s 12 largest, lowest-cost tissue machines. Most of our tissue facilities are integrated with onsite pulping operations, which strengthens our low-cost position by eliminating pulp drying and shipping costs. Approximately 54% of our tissue pulp is made from virgin fiber and 46% is made from recycled paper, most of which is used in commercial tissue products. Our total production capacity in North America is approximately 3.1 million tons.

The markets for our tissue products are significantly influenced by growth in population and employment levels, along with changes in per capita consumption, and the levels of general economic activity in the geographic markets we serve.

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We take a careful approach to balancing supply with demand for all of our principal products, and have reduced or eliminated production from less efficient equipment in recent years. In 2004, we shut down two tissue machines, one at our Green Bay, Wisconsin (Broadway) mill and another at our Plattsburgh, New York mill, shifting production to more cost-efficient equipment in other parts of the country. Together, the two machines had capacity of over 45,000 tons per annum, or “tpa”.

In 2003, we shut down tissue paper machines at Plattsburgh, New York, Bellingham, Washington, Camas, Washington and Old Town, Maine, resulting in total primary tissue reduction of 134,000 tpa, or over 4% of our capacity at the time. Our Old Town, Maine paper machine, with a capacity of 45,000 tpa, is scheduled to resume production in 2005.

North America Consumer Products

Retail Tissue.    In the retail channel, which accounted for 69% of our domestic tissue sales in 2004, we produce our own branded products and customer branded products. Product market share in both branded and customer branded products, and rankings of our principal retail brands based on dollar share, are:

Other retail brands include Brawny^® napkins, Soft ‘n Gentle^® bathroom and facial tissue, Mardi Gras^® towels and Zee^® napkins (number one on the West Coast). We also supply customer branded products to some of the largest retailers in the United States. We believe we are the leading supplier to the United States customer brand tissue, towel and napkin market, with an estimated market share of 39% (based on A.C. Nielsen data, including Wal-Mart, for the 52 weeks ending Jan. 8, 2005).

We also believe that through our own branded products and our customer branded products we are the leading supplier of tissue, towel and napkin products to mass retail and warehouse club stores, two of the fastest growing channels in the consumer products industry. Additionally, we have strong, long-term relationships with major retailers in the grocery channel.

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Commercial Tissue.    In 2004, the remaining 31% of our domestic tissue sales came from commercial and industrial markets. These sales were made through paper distributors, food service and janitorial distributors, and to national fast food accounts for use in restaurants. Our principal commercial brands include: Quilted Northern PS^® and Angel Soft PS^® bath and facial tissues; BigFold^® and Signature^® towels; Preference^®, Acclaim^® and Envision^® brands of folded, hardwound roll and perforated roll towels, bath and facial tissue; Compact^®, HACCP Guardian^®, MAX 3000^®, enMotion^®, SofPull^®, and Cormatic^® controlled usage dispensing systems for a range of towel, tissue, soap, air freshener and toilet seat cover products; Easy Nap^®, Essence^®, Impressions^®, MORNAP^®, and Preference^® brands of dispenser or single-service napkins; and ShopMaster^®, DynaMAX^®, TuffMate^®, and TaskMate^® wipers.

According to the American Forest & Paper Association, during 2004, we sold more tissue products in the commercial channel than any other company in the United States and, based on volume, had an estimated 40% share in this market. We have developed proprietary dispensing systems, such as our enMotion^® automatic dispensing system, which use only Georgia-Pacific-produced towels. We believe we are the market leader in proprietary systems and that we hold the primary position in foodservice, healthcare, lodging, education, recreation, and retail/convenience end-use markets. Our commercial market share leadership and innovative proprietary systems position us favorably in a fluctuating economic environment.

Dixie^®.    Our Dixie business, with the best-known brand name in disposable consumer plates and cups, holds a 25% share of the consumer tabletop market (based on the 52 week A.C. Nielsen Homescan data, including Wal-Mart and club, ending September 24, 2004). Dixie^® is the number one brand in the North America disposable consumer tableware market. Through 11 production facilities in North America, we manufacture a full range of products for both retail and foodservice markets including disposable plates, cups and cutlery. We supply tabletop products to the warehouse and club channels and disposable cups, plates and related products to the foodservice industry. Foodservice customers include distributors, restaurants, hotels, office buildings and institutions. Approximately 60% of Dixie sales are into retail distribution channels and the remaining 40% of the business’ sales are into foodservice distribution channels. In 2004, Dixie’s net sales to third party customers were $985 million.

International

The international consumer products segment is a leading supplier of paper-based consumer products in many European countries. Product lines in both the retail and commercial markets include bathroom and facial tissue, paper towels and napkins. Retail sales include both our branded products and customer branded products. We also market feminine hygiene products and ancillary products such as health care, cosmetic cotton and pharmacy supplies, in certain countries.

International Consumer Products

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Our principal European brands and their estimated market positions are:

Our international consumer products are manufactured across Europe in ten primary production mills, with an annual capacity of over 899,000 tons, or are purchased from others. Eight separate converting plants supplement converting operations carried out at our primary production mills. This combined network provides cost-effective market reach, which lowers distribution cost and provides greater distribution capacity.

During 2004, tissue-based products accounted for 78% of our annual international consumer products sales, with the balance comprised of feminine hygiene products and ancillary products such as health care, cosmetic cotton and pharmacy items. We sell our tissue, towel and napkin products through both retail and commercial distribution channels. Approximately 72% of our European towel and tissue sales were into retail distribution channels and 28% were into commercial and other channels.

In 2004, we worked to reduce operating costs and improve efficiencies in our European operations. We relocated an inefficient converting facility in Wrexham, Wales, and relocated a high-cost converting facility in Athens, Greece, to Patras, Greece, where we believe its cost position will improve significantly. Additionally, during 2004, we announced plans to begin tissue production and expand existing converting operations in Russia to serve that growing market. In 2005, we intend to permanently close our converting facility at Newcastle, United Kingdom. The facility has the capacity to convert 12,000 tons of tissue products. We anticipate relocating the Newcastle equipment by October 2005.

Building Products Manufacturing

We are one of the leading manufacturers of building products in the United States. We manufacture products used in residential, commercial and industrial construction. Our building products line-up includes wood panels, such as plywood, oriented strand board and industrial panels; lumber; gypsum products; and chemicals. These products are sold directly to large home improvement mass retailers, wholesalers, independent dealers and industrial customers. We are the largest supplier of wood panels to the home improvement mass retailers channel. Our building products are manufactured at 94 locations in the United States, six in Canada, four in South America, and a joint venture facility in South Africa.

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Building Products Manufacturing

Our building products business is affected by the level of new housing starts; the level of home repairs, remodeling and additions; industrial and commercial building activity; the availability and cost of financing; and changes in industry capacity. The demand for building products tends to be stronger during the second and third quarters when weather conditions favor construction. Exports by this segment in 2004 were $17 million (1% of segment sales), primarily to the Caribbean and Europe.

In May 2004, we completed the sale of our building products distribution business to BlueLinx Holdings, Inc. In connection with this divestiture, we entered into a six-year agreement to sell structural panels, lumber, and other building products manufactured by us to BlueLinx. This supply agreement contains substantially similar terms as the previous arrangement between our building products manufacturing and building products distribution businesses. In 2004, sales from building products distribution, prior to its sale, totaled $1.9 billion. Operating results from this business are included in historical data through April 2004.

Structural Panels.    Based on annual capacity of 8.3 billion square feet, we are the largest producer of structural wood panels in North America and are the leading supplier of wood panels to the home improvement mass retailers channel. In order to distinguish our plywood products, we branded our family of southern plywood products under the name Plytanium^®. Our 18 softwood plywood plants have an annual capacity of approximately 6.1 billion square feet, and our six oriented strand board plants can produce 2.2 billion square feet. In 2004, structural panels sales of $2.5 billion, including both structural and industrial wood panels, were 36% of total building products manufacturing segment sales to third parties.

With most of our structural panel plants located in the southeastern United States, we normally benefit from an ample supply of timber, favorable weather conditions, and regional population growth. However, during the fourth quarter of 2004, our building products business was negatively impacted by constrained supplies of timber due to heavy rainfall in parts of the southeastern United States.

Two of our facilities manufacture engineered lumber products. Demand for engineered lumber products has increased in recent years as wood I-joists (made from veneer, oriented strand board and sawn lumber) have increasingly become the product of choice for floor joist applications. GP Lam^™, our laminated veneer lumbers, and Fiberstrong^® Rim Board and Wood I Beam^® joists are designed to meet the precise structural performance requirements of roofing and flooring systems.

Industrial Wood Products.    We also manufacture industrial wood panels and hardwood plywood for use in ready-to-assemble furniture, cabinets, retail fixtures, mobile homes and other industrial products. Sixteen mills manufacture composite panels of particleboard, medium-density fiberboard, hardboard and softboard, as well as hardwood plywood, interior decorative panels and thermally fused melamine panels.

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Lumber.    We have the capacity to manufacture approximately 2.3 billion board feet of lumber annually. In 2004, lumber sales to third-party customers were $1.2 billion, or 18% of total segment sales. Most of our 25 lumber mills are located in the southeastern United States. Lumber products are primarily manufactured from southern pine, hemlock and Douglas fir.

We are one of the top producers of pressure-treated lumber in the nation. Approximately 31% of our southern pine lumber production is pressure-treated for use in outdoor applications such as decks, fences, bridges and playground equipment. We own six pressure-treated lumber plants, two of which are currently idle. An unaffiliated company operates four of those treating plants, as well as seven additional plants that it owns. With production from those facilities, we can produce more than one billion board feet of treated lumber annually. We are the primary supplier of pressure-treated lumber to one of North America’s fastest-growing home improvement mass retailers.

In 2004, we sold four hardwood lumber mills. In 2003, we closed one southern pine sawmill and sold a hardwood sawmill.

Gypsum Products.    We operate 18 gypsum product plants throughout the United States and Canada, and have the third largest gypsum wallboard capacity in North America of 6.5 billion square feet annually. During 2004, gypsum product sales of $909 million represented 13% of total segment sales. Gypsum products include wallboard, specialty panels, fire-door cores, industrial plasters and joint compound. The business is substantially vertically integrated in paper and gypsum rock, operating three recycled gypsum paperboard mills and nine gypsum quarries/mines. Our gypsum reserves total approximately 284 million recoverable tons, an estimated 72-year supply at current production rates.

As part of our strategy to grow businesses with higher value-added products, we are continuing to develop our Dens Technology^TM group of products. Dens Technology^TM products are highly differentiated in the marketplace and are based on a patented, innovative glass mat technology that offers exclusive performance features such as unmatched moisture and mold resistance and strength characteristics. In 2004, we restarted our idled Savannah gypsum plant to produce additional Dens Technology^TM products to meet demand. We have enhanced our manufacturing capabilities to produce Dens wallboard at multiple facilities, thereby reducing distribution costs and delivery times. Also in 2004 we introduced DensGlass Silver^TM, a mold and mildew resistant exterior sheathing targeted at single and multi-family residential construction markets.

Chemicals.    Our chemical business is a leading supplier of wood bonding resins, industrial thermosetting resins, formaldehyde, paper chemicals, and tall oil-based chemicals. These chemicals and resins are used in a variety of specialty applications, including the production of wood panels, papermaking, roofing, thermal insulation, metalworking, coatings, fertilizers and transportation. The chemical business ships more than four billion pounds of bonding and thermosetting resins, formaldehyde, pine chemicals, and paper chemicals annually from 17 plants in the United States and four plants in Chile, Argentina and Brazil. The business also operates through a joint venture in South Africa. In 2004, chemical sales of $588 million were 9% of total segment sales.

In 2003, we idled our White City, Oregon, thermosetting resin and formaldehyde plant. The White City plant’s annual capacity of thermosetting resins and formaldehyde represented 6% and 10%, respectively, of the total capacity of the division. Also in October 2003, we acquired a thermosetting resin business in Brazil, including one formaldehyde plant with 120 million pounds of annual capacity and two resin plants with 163 million pounds of annual capacity.

Packaging

Our packaging segment focuses on providing packaging solutions for a wide variety of customers, including the food, consumer products, paper and other manufacturing industries, as well as independent packaging

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converters and rollstock customers for containerboard. We develop and maintain relationships with national account customers and operate with a customer-focused approach that emphasizes value-added packaging solutions. We are growing our high-graphics packaging business, which is improving our total product mix.

Packaging

Our four containerboard mills have a total capacity of 3.7 million tons. These mills produce unbleached linerboard and medium in roll form that is shipped to converting facilities. Our containerboard mills produce approximately 70 to 75% of their products from virgin fiber, with the remaining fiber derived from old corrugated containers.

Our converting facilities consume between 70 and 75% of the containerboard produced by our mills. The rest is typically sold to independent corrugated converters in North America, Latin America and Asia. In addition to standard corrugated boxes, our converting facilities supply many specialty packaging products. These include display-ready corrugated packaging that works interchangeably with our line of reusable plastic containers, double and triple-wall boxes, bulk bins, water-resistant packaging, and high-graphics and pre-printed packaging for point-of-sale displays.

Our Color-Box^™ subsidiary produces high quality litho-laminated packaging at eight specialty printing, coating and converting facilities. We believe that our Innovation Institute differentiates us from our competition. This unique facility is focused on collaborating with our customers to develop supply chain solutions that improve efficiencies and reduce costs.

Markets for our containerboard and packaging products are affected primarily by changes in industry capacity, the level of industrial activity in the United States, and export markets. In 2004, we sold $2.2 billion of packaging and $617 million of containerboard to third-party customers, representing 15% of total company sales. Containerboard exports totaled 340,000 tons in 2004, compared to 287,000 tons in 2003. In 2004, total exports were $133 million, or 5% of segment net sales.

Bleached Pulp and Paper

Our bleached pulp and paper segment produces office paper, bleached board, bleached and unbleached kraft paper, as well as pulp, at eight facilities in North America. The segment also includes a recycled fiber sourcing operation which purchases and resells waste fiber both for our use and for third-party customers. We have sold a large portion of our stand-alone pulp and office paper facilities in recent years. Our remaining paper machines

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are integrated into our tissue facilities and help absorb fixed costs. Our combined production capacity for office paper, bleached board and kraft papers is 2.0 million tons.

We produce primarily office papers sold in retail channels such as mass retailers and warehouse club stores, as well as in office supply, merchant and paper distributor channels. We are the largest supplier of branded office papers to the mass retailer and warehouse club store channels, and hold the leading dollar share of branded office papers used in the home. As we have shifted to higher value-added products, our bleached paper operations have focused on office paper that is sold primarily through many of the same retail channels that sell our consumer products, and much of this paper is shipped along with our tissue products in “mixed” truckloads from a single mill. We consider our ability to ship such mixed truckloads to be one of our competitive advantages as we continue to develop specific and unique supply chain solutions for our mass retailer customers.

Bleached Pulp and Paper

We manufacture approximately 600,000 tons of bleached paperboard annually for use in frozen food containers, food service items and other products. This business supplies a significant portion of its production capacity to our Dixie^® business for manufacturing paper cups, plates and bowls. We also manufacture approximately 300,000 tons of bleached and unbleached kraft paper sold primarily to industrial users for conversion into multi-wall paper bags that are ultimately used to package a variety of consumer and commercial products. Our remaining market pulp manufacturing capacity consists of approximately 200,000 tons at our Old Town, Maine facility.

In 2004, pulp sales of $74 million were 5% of total segment sales to third party customers. In 2004, exports for the bleached pulp and paper segment were $119 million, or 5%, of segment sales. Markets for our bleached pulp and paper segment are affected primarily by levels of white-collar employment and economic growth, industry production capacity and inventory levels, and fluctuations in currency exchange rates.

Our Harmon Associates subsidiary is responsible for buying and supplying recycled fiber to all of our tissue and containerboard facilities. Harmon is the largest recycler in the world without plant operations. The company purchased over 5 million tons of recycled fiber in 2004, and supplied 2 million tons of de-inked fiber to our tissue mills and 1.3 million tons of brown grade material to our containerboard mills.

The operating results from our 38.85% equity investment in Unisource, our former paper distribution business sold in 2002, are reported in the bleached pulp and paper segment.

Competition

Each of our operating segments participates in markets that are highly competitive. Because many of our competitors sell their products at prices lower than ours, we compete primarily on the basis of product quality

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and performance, product innovation, supply chain efficiencies, value, brand strength (including brand recognition and loyalty) and advertising.

In our consumer products markets, we compete primarily against The Procter & Gamble Company, Kimberly-Clark Corporation, and Svenska Cellulosa Aktiebolaget (SCA), both in North America and in Europe. Competition in these markets is intense. The pricing elements and methods of competition include brand recognition and loyalty, product innovation, quality and performance, price and marketing and distribution capabilities. In our building products business, where competition for commodity products is based primarily on price, quality and performance, and distribution capabilities, Louisiana-Pacific Corporation, Weyerhaeuser, U.S. Gypsum Corporation and National Gypsum Corporation are our primary competitors. In packaging, International Paper Company, Weyerhaeuser, Smurfit-Stone Container Corporation, Temple-Inland, and Packaging Corporation of America are our key competitors, while our competition in the bleached pulp and paper segment includes International Paper, Weyerhaeuser, Boise Cascade, LLC, MeadWestvaco and Domtar Inc.

Significant Customers

We consider major mass retailers, warehouse club stores and supermarket chains in both North America and Europe to be significant customers for several of our operating segments. We have developed specific and unique approaches to working with these customers, which include Wal-Mart Stores Inc., Costco Wholesale Corp., Sam’s Wholesale, Carrefour SA, The Home Depot, Inc., Lowe’s Companies Inc., Royal Ahold N.V., Target Corp., Sysco Corp., Kroger Co., Unisource, US Foodservice and Staples Inc. We face strong competition for the business of these significant customers.

No single customer accounts for more than 10% of our consolidated revenue. We believe our relationships with our key customers are good. Nevertheless, if any one of our significant customers reduces, delays or cancels substantial orders for any reason, our business and results of operations could be negatively affected, particularly for the quarter in which the delay or cancellation occurs.

We generally do not have long-term sales agreements or other contractual assurances as to future sales to any of our major customers. In addition, continued consolidation in the retail industry has resulted in an increasingly concentrated retail base. To the extent such concentration continues to occur, our net sales and operating income may be increasingly sensitive to deterioration in the financial condition of, or other adverse developments involving our relationship with, one or more customers. Another result of consolidation in the retail industry is that our customers are able to exercise more leverage on us with respect to pricing and payment terms.

Environment

Information pertaining to environmental issues and our expenditures for pollution control facilities and equipment is set forth under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental Matters,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Investing Activities” and Note 17 of the Notes to Consolidated Financial Statements, which are included under Items 7 and 8 of this Form 10-K.

Employees

We employ approximately 55,000 people. Approximately 22,000 of our employees in the United States and Canada are members of unions. We consider our relationship with our employees to be good. During 2005, 23 union contracts will be subject to negotiation and renewal, including five at large facilities.

Raw Materials

Most of our products are made of solid wood, virgin and recycled wood fiber, or wood by-products. We purchase the majority of these raw materials from timber owners, independent log merchants and brokers, and

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recycled fiber brokers. No single supplier supplies more than 10% of our timber requirements. During 2004, Plum Creek Timber Company, Inc. supplied 6% of our overall timber requirements under the terms of a timber supply agreement. We purchase our remaining timber requirements from third-party landowners in the open market. Because of our reliance on timber supplies in the southeastern United States, our building products business was negatively impacted by constrained supplies of timber due to heavy rainfall in this area during the fourth quarter of 2004.

Every year, Georgia-Pacific uses millions of tons of recycled fiber to make products ranging from boxes to paper towels and tissue, which is supplied by our Harmon Associates subsidiary.

Information pertaining to our gypsum reserves is set forth under the captions “Building Products Manufacturing—Gypsum Products” in this item.

Research and Development

We perform research into tissue papermaking, tableware manufacturing and tissue and towel dispensing technology in order to develop improved consumer products for the North America and Europe markets. This research and product development is conducted at technical centers in Neenah, Wisconsin, and Kunheim, France. These centers have developed critical new papermaking and converting techniques that have allowed us to improve or expand our product lines, improve fiber efficiency and reduce raw material costs.

We also have a research facility located in Decatur, Georgia where we perform research into adhesives for composite wood products, binders for non-wood industrial applications, performance paper chemicals and pine chemicals. The Gypsum Division’s technical center is also in Decatur, Georgia, developing and supporting our specialty gypsum products. In addition, we have central technology services in support of wood products manufacturing.

Research and development costs are expensed as incurred and totaled $61 million, $64 million and $65 million in 2004, 2003 and 2002, respectively.

Patents, Copyrights, Licenses, Trade Secrets and Trademarks

We own or license a broad range of technology protected by patents, copyrights, and trade secrets, and maintain a substantial body of know-how (herein collectively referred to as “technology”) relating to our products and the processes for their production, the packages used for our products, and the design and operation of various processes and equipment used in our businesses. We also own or license a wide range of manufacturing, quality assurance and financial software. The methods for manufacturing and processing our products are among our important trade secrets.

We also own numerous trademarks, which are important to our business, especially our consumer products businesses. Depending upon the jurisdiction, trademarks are valid as long as they are in use and they have not become generic. We have licensed the right to use certain of our trademarks to third parties in conjunction with selected products we do not manufacture. In part, our success can be attributed to the existence of our trademarks.

Additional Information

Additional information pertaining to our businesses, including operating segments, is set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations and Related Information” under Item 7 of this Form 10-K and in Supplemental Information under the caption “Georgia-Pacific Corporation and Subsidiaries—Sales and Operating Profit by Operating Segment” and in Note 3 of the Notes to Consolidated Financial Statements, which are included under Item 8 of this Form 10-K.

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Our reports on Form 10-K, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Information section of our Internet website, at www.gp.com. The information contained on or connected to our Internet website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the SEC. Shareholders may also contact Investor Relations, Georgia-Pacific Corporation, 133 Peachtree Street, N.E., Atlanta, Georgia 30303 or telephone (800) 654-2582 to obtain a copy of any of these reports without charge.

Factors That May Affect Future Results

Some of the matters discussed in this Form 10-K concerning, among other things, our business outlook, anticipated financial and operating results, strategies and contingencies, constitute forward-looking statements and are based upon our expectations and beliefs concerning future events. There can be no assurance that these events will occur or that our results will be as estimated. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Affect Future Results” under Item 7 of this Form 10-K for a more detailed discussion of the factors and additional considerations that may affect our future results.

ITEM 2.    PROPERTIES

The geographic location and capacity of our manufacturing facilities by segment is set forth on Exhibit 99.1 to this Form 10-K, which is incorporated herein by this reference.

Our manufacturing and support facilities are designed according to the requirements of the products to be manufactured. Therefore, the type of construction varies from facility to facility. We believe that our manufacturing facilities are well-maintained and generally adequate for current operations.

Utilization of a particular facility varies based upon demand for the product. We have included the estimated capacity of our principal facilities in Exhibit 99.1, which is incorporated herein this reference.

We generally own our manufacturing and other facilities, although warehouse and office facilities are often leased. We examine alternatives for our higher cost facilities, including modernizing, replacing or closing such facilities. We continually review many business opportunities and alternatives, including possible acquisitions or sales of properties.

Information concerning our mineral resources is presented under Item 1 of this Form 10-K.

ITEM 3.    LEGAL PROCEEDINGS

Information pertaining to material legal proceedings in which we are involved is set forth in Note 17 of the Notes to Consolidated Financial Statements, which are included under Item 8 of this Form 10-K and are incorporated herein by this reference.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

Georgia-Pacific common stock is listed on the New York Stock Exchange and trades under the symbol GP. As of the close of business on February 23, 2005, the closing stock price of one share of Georgia-Pacific common stock was $34.75 and there were approximately 35,868 record holders of such stock.

The information with respect to historical dividend and market price data in Note 19 of the Notes to Consolidated Financial Statements and in “Selected Financial Data—Financial Position, End of Year” that follows Note 20 of the Notes to Consolidated Financial Statements, included in Item 8 of this Form 10-K, are incorporated herein by this reference.

On February 3, 2005, we announced that our Board of Directors increased our quarterly cash dividend by 40% to 17.5 cents per share from 12.5 cents per share. The increased dividend is equal to an annual rate of 70 cents per share compared with the previous annual rate of 50 cents per share. We expect to continue to pay quarterly dividends.

Information related to our equity compensation plans is incorporated herein by reference to our 2005 Proxy Statement, which will be filed with the Securities and Exchange Commission within 120 days of the end of our fiscal year.

Selected Financial Data information is set forth under the captions “Georgia-Pacific Corporation and Subsidiaries—Supplemental Information—Selected Financial Data—Operations” and “Georgia-Pacific Corporation and Subsidiaries—Supplemental Information—Selected Financial Data—Financial Position, End of Year,” which follow Note 20 of the Notes to Consolidated Financial Statements, and is incorporated herein by this reference.

The purpose of the following discussion is to provide investors with enhanced financial disclosure and provide the context within which our financial statements should be analyzed. Accordingly, our intent in this section is to provide investors with an understanding of our past performance and financial condition by focusing on changes in a number of key areas from year to year. Additionally, we discuss our prospects and strategies for the future and provide insights into our critical accounting estimates.

Executive Overview

We are one of the world’s leading manufacturers and marketers of tissue, packaging, paper, building products, and related chemicals. With 2004 sales of $19.7 billion, we employ approximately 55,000 people at more than 300 locations in North and South America and Europe. Our operations break down into four principal businesses:

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As the following chart illustrates, two of our businesses—consumer products and building products—largely drive our operations. The chart excludes the net sales from our building products distribution segment, which we sold in May 2004. Sales to third-party customers during 2004 and 2003 include $550 million and $1.2 billion, respectively, in sales from our building products manufacturing segment to the building products distribution segment.

Third-Party Sales by Principal Business

Our four principal businesses are reported in six operating segments:

Since our acquisition of Fort James in late 2000, our principal goal has been to reduce our debt from its peak of approximately $16 billion. By the end of 2004, we had reduced our debt to $8.7 billion. We believe our debt reduction is a significant achievement given the difficult economic environment in which a number of our businesses, particularly our consumer products business, have been operating over the last several years. During 2004, we sold several non-strategic businesses and assets, including our building products distribution business, our market pulp mills in Brunswick, Georgia, and New Augusta, Mississippi and our interests in a Brazilian pulp business. Proceeds from these sales were used to reduce our debt. Although we believe our most significant asset sales have now been completed, we will continue to divest smaller, non-strategic businesses and assets that are not providing sufficient returns on our investment.

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A key strategic emphasis has been improving our consumer products business, especially our branded tissue and towel portfolio. Since our acquisition of Fort James in 2000, we have worked to differentiate our premium brands through product improvements and new advertising, while also capturing higher revenue. In 2004, we significantly improved our two flagship brands, Brawny^® paper towels and Quilted Northern^® bath tissue, and successfully completed their re-launch in the marketplace.

One of our most innovative concepts for the commercial tissue market, our patented enMotion^® touchless towel-dispensing technology, was developed in response to heightened concerns about hygiene in public places. Used primarily by hospitals, foodservice customers, and in other high-traffic public spaces, enMotion^® dispensers help to lower waste and reduce maintenance expense. Launched first in the United States, and then in the Netherlands and other European countries, enMotion^® has been enjoying significant growth since its launch in late 2002. It clearly has been one of the drivers of our proprietary dispensing strategy. Innovation also has been driving our Dixie^® brand. Dixie^® continues to be the fastest-growing cup and plate brand in the United States, largely as a result of innovations such as the performance upgrade of our heavy duty plate line and continued expansion of our patented PerfecTouch^® cup line. In 2005 and beyond, we must continue making these types of successful innovations throughout our consumer products business.

In our building products business, we will continue with a similar strategy of product differentiation. As in 2004, we will continue to focus our building products business on specialty and value-added products. Furthermore, we will continue to capitalize on the increasing trend toward do-it-yourself building and remodeling through our solid relationships with the fastest-growing retail home improvement centers in the United States. The emergence of these mass retailers is a profound change in the building products business and, because over one third of our sales of building products are sold through them, continuing to focus on this channel is a critical component of our future success. We continue to target this channel in order to attract consumers to our premium branded Plytanium^® plywood. As our own surveys have indicated, when given the choice, more than 70% of consumers prefer plywood over oriented strand board panels.

Our packaging segment is focused on selling packaging solutions that are applicable across the entire supply chain from consumer products manufacturers, through distributors and retailers, to customers. One of the services we provide is the Packaging Systems Optimization (PSO) audit. We use PSO to identify and implement cost savings for our customers. We take a total cost perspective and look beyond the package to include all the processes that packaging touches. By doing this, we are able to develop solutions that lower total system cost, not just shift cost from one member of the supply chain to another. Our process is collaborative with our customers and their customers—the retailers.

A number of factors can affect our businesses, including the effectiveness of our operating initiatives, our relationship with several significant customers, and changes in global and local business and economic conditions. These and other risks are noted in the section entitled “Factors That May Affect Future Results” at the end of this discussion and analysis.

Industry Conditions

In addition to our strategic initiatives, the primary issues that will affect us going forward are general economic and operating conditions in the United States and Europe and the levels of supply and demand in the paper and forest product industry. All of our businesses have experienced, and continue to experience, inflationary cost pressures for raw materials and energy costs.

Most of our businesses experienced weak industry conditions during 2002 and the first half of 2003. Industry production capacity generally exceeded demand, resulting in cyclically low prices and declining operating results for our consumer products, packaging, and bleached pulp and paper businesses. We shut down a number of facilities and machines in an effort to maximize the efficiency of our manufacturing and logistics systems, resulting in asset impairment charges and severance costs, which are more specifically discussed in the following segment discussions and in the Notes to Consolidated Financial Statements.

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Industry conditions were stronger during the second half of 2003 and throughout 2004. In our building products manufacturing segment, results were driven by very strong demand for building materials and low industry inventories. This positive momentum continued throughout most of 2004 as residential housing starts maintained high levels. Plywood and oriented strand board prices fell sharply in the fourth quarter as we experienced our normal seasonal slowdown, though they have since recovered. We believe housing starts will remain high in the near-term, primarily because mortgage rates are likely to remain historically low, and U.S. immigration trends for the next several years indicate continued growth in new housing starts. We believe that any decline in residential building would be partially offset by commercial and industrial sector gains as the economy improves.

During 2004, particularly in the second half of the year, market conditions improved for our consumer products businesses in North America, as well as our bleached pulp and paper and packaging businesses, driven by improving economic and employment conditions in the United States. Market conditions in Europe remained sluggish during 2004, as we continued to experience declining prices in local currencies coupled with flat sales volumes.

Asbestos

We, and many other companies, are defendants in suits brought in various courts around the nation by plaintiffs who allege that they have suffered personal injury as a result of exposure to asbestos-containing products. Our asbestos liabilities relate primarily to joint systems products manufactured by Bestwall Gypsum Company and our gypsum business that contained small amounts of asbestos fiber. We acquired Bestwall in 1965, and discontinued using asbestos in the manufacture of these products in 1977. These suits allege a variety of lung and other diseases based on alleged exposure to our products. In many cases, the plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that any injuries they have incurred did in fact result from exposure to our products. Virtually all asbestos suits involve multiple claimants seeking money damages from multiple defendants. Historically, the vast majority of claims against us have been resolved either by settlement or a dismissal, rather than by jury verdicts.

Beginning in 2001, and again at the end of 2002, 2003, and 2004, we retained National Economic Research Associates (“NERA”), nationally recognized consultants in projecting asbestos liabilities, and Navigant Consulting, nationally recognized consultants in insurance allocation analysis, to work with us to estimate the amounts, net of insurance, that we would pay for our asbestos-related liabilities and defense costs for the following ten-year periods. NERA has reviewed our asbestos indemnity payments and claims activity in 2004 and compared them to the forecast NERA prepared in 2002 of our total asbestos liabilities for 2003 through 2012 and subsequently extended in 2003 though 2013. Based on this review, NERA has determined that our indemnity payments in 2004 are in line with its 2002 forecast. NERA has concluded, as it did at the end of 2003, that the assumptions used in its 2002 forecast to estimate our future asbestos indemnity payments remain valid, and that no changes to the underlying forecast are necessary with respect to that portion of our total liability, other than extending it through 2014. NERA also advised that there is a reasonable basis for estimating that $48 million be added to our reserves to cover estimated indemnity payments in 2014 so that our total reserves cover the next ten years.

Beginning in late 2003 and continuing throughout 2004, we significantly increased our spending to defend asbestos claims because the number of new mesothelioma claims being filed against us increased, and because plaintiffs’ lawyers made higher settlement demands in these cases. During 2004, we developed additional affirmative defenses, conducted more extensive discovery into the medical condition of plaintiffs and their allegations that our products caused such conditions, and significantly increased the number of cases we took to trial. We anticipate that our future defense spending will be significantly more than previously estimated as we respond to plaintiffs’ settlement demands. Accordingly, we worked with NERA to develop a revised projection of our defense costs based on our historical defense spending. At the end of 2004, with NERA’s concurrence, we added $109 million to our overall asbestos reserve for additional defense costs through 2014.

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During 2004, we reduced our asbestos insurance receivable by $2 million to reflect the insolvencies of two small insurers, largely offset by a settlement with another insurer that was more favorable than expected. Cash receipts in 2004 were significantly lower than in 2003, since we are currently drawing on a layer of excess insurance where there are significant insolvencies. In addition, the $156 million of insurance receivables we sold in 2003 covered certain payments that would have been received during 2004 and 2005. Although insurance receipts will remain low during 2005 for the same reasons, beginning in 2006 and continuing through 2008 they are expected to increase significantly, and should substantially offset amounts we forecast spending for indemnity and defense costs in those years. All of our available insurance is included in an insurance receivable.

Several events have occurred over the past year in the area of asbestos and tort reform legislation that we believe could potentially have a positive effect on the amount of asbestos claims we pay in the future. A bill to establish a trust fund to pay pending and future asbestos-related disease claims, and remove such cases from federal and state courts, was extensively negotiated by the leadership of both political parties in the United States Senate during 2004, although no vote on the legislation occurred before the elections. A similar bill is expected to be introduced in the Senate early in 2005. Tort reform legislation was enacted in several states during 2004, as it had been in other states in 2003. Generally, such legislation has significantly reduced the number of non-malignant claims being filed against us, and has also required plaintiffs to show that they reside, or were injured, in the jurisdiction in which they bring claims.

For further information regarding our asbestos matters, see Note 17 of the Notes to Consolidated Financial Statements, which information is incorporated by reference.

Overview of 2004 Results

Cash flow and liquidity continue to be strong.

Net sales were up in each of our business operating segments.

Operating profit and income from continuing operations increased.

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The following chart shows the change in operating profit by segment.

Our fiscal year ends on the Saturday closest to December 31. Typically our fiscal year consists of 52 weeks ending on Saturday. However, because our 2003 fiscal year ended on January 3, 2004, our 2003 fiscal year consisted of 53 weeks.

Liquidity and Capital Resources

We believe it is important to manage our debt and equity to keep our weighted average cost of capital low while retaining the flexibility needed to ensure that we can meet our financial obligations and finance capital spending and attractive business opportunities. We continuously review the appropriate level of debt to employ in our capital structure so that we have the necessary flexibility to finance future growth. Historically, we set debt targets based on our ability to generate cash under various business scenarios.

We maintain a high portion of our debt as long-term at fixed interest rates. We intend to manage the maturities of our long-term debt (excluding bank debt) so that generally no more than $500 million matures in any one year and, if it does, so that the sum of the maturities in any two consecutive years does not significantly exceed $1 billion. Our current maturities are in substantial compliance with these guidelines. Generally, we seek to have 75% of our aggregate debt at fixed rates so as to minimize exposure to fluctuating interest rates. Currently, approximately 77% of our aggregate debt is at fixed rates.

Short-term debt is generally used to fund seasonal working capital needs. We utilize bank credit for temporary short- to intermediate-term financing, and to bridge known or expected events. Additionally, we maintain committed, available borrowing capacity to allow for seasonal, timing or unexpected needs.

We are focused on reducing the amount of debt that we carry and minimizing the interest costs on that debt. During 2004, our total debt level was reduced by $1,953 million using proceeds from asset sales and operating cash flows. We expect our cash flow from operations and financing activities will be sufficient to fund planned capital investments, pay dividends and make scheduled debt repayments for the foreseeable future. The following discussion provides further details of our liquidity and capital resources.

Operating Activities

In 2004, we generated cash from operations of $1,474 million compared to $1,792 million a year ago. Cash flow from operations in 2004 was impacted by $250 million of normal working capital buildup in our building

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products distribution business prior to its sale and a $100 million increase in pension-related payments. During 2003, cash from operations included a $354 million income tax refund.

Investing Activities

Capital expenditures for property, plant and equipment for 2004 were $713 million, compared to $710 million in 2003. Our capital spending for 2005 is expected to be approximately $820 million and will be funded primarily by cash flows from operations. This includes a new oriented strand board facility in Hosford, Florida, which is expected to begin operating in the first half of 2005. Other major projects for 2005 include the installation of a boiler and a turbine generator at our Port Hudson, Louisiana facility and the installation of wastewater treatment equipment at our Palatka, Florida facility. The following charts show our capital expenditures by business operating segment.

On April 15, 1998, the United States Environmental Protection Agency (“EPA”) promulgated a set of regulations known as the “Cluster Rule” that established new requirements for air emissions and wastewater discharges from pulp and paper mills. The Cluster Rule requires pulp and paper mills to eliminate elemental chlorine in the pulp bleaching process. The Cluster Rule imposes Maximum Achievable Control Technology, or MACT, regulations, with MACT I regulations covering pulping and bleaching and MACT II regulations covering combustion sources. We estimated that we would make capital expenditures of up to approximately $534 million through April 2007 in order to comply with the Cluster Rule’s requirements. Of that total, approximately $428 million was spent through 2004, including $43 million in 2004, and an additional $95 million is expected to be spent in 2005. The work performed in 2004 was a combination of MACT II requirements and installation of several systems for the second part of MACT I. The remainder of that total will be spent on requirements under MACT II at Big Island, Virginia and the second part of the MACT I regulations (to be completed in 2006 and 2007).

In February 2004, the EPA finalized two new MACT requirements that establish air emission limits for plywood and composite panel facilities (“PCWP MACT”) and for certain boilers at both wood products and pulp and paper facilities (“Boiler MACT”). Compliance with these standards will be required by mid-2007. We currently estimate compliance costs for the PCWP MACT standard to be approximately $80 million at 19 plants, and for the Boiler MACT standard to be approximately $50 million on 40 boilers at various manufacturing locations.

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During 2004, we sold our building products distribution segment, our stand-alone market pulp mills in Brunswick, Georgia, and New Augusta, Mississippi, along with a short-line railroad, our interest in a Brazilian pulp business, and four hardwood lumber mills, as well as several non-strategic packaging assets and an aircraft. The table below shows the financial impacts of these and other asset sales during 2004:

During the second quarter of 2004, we purchased packaging facilities in Ontario, California and Harrington, Delaware for approximately $21 million.

Financing Activities

Our debt decreased by $1,953 million to $8,695 million at January 1, 2005 from $10,648 million at January 3, 2004. This decrease includes the effect of changes in foreign currency exchange rates of $8 million. For 2004, the weighted average interest rate on our total debt, including outstanding interest rate exchange agreements, was 7.0%. The following table details changes in our short and long-term debt balances during 2004:

For a detailed discussion of our debt position and the financing activities, see Note 9 of the Notes to Consolidated Financial Statements.

Our borrowing arrangements contain a number of financial and non-financial covenants. The more significant financial covenants are discussed in Note 9 of the Notes to Consolidated Financial Statements. In addition, certain agreements contain cross-default provisions. Our continued compliance with these covenants is dependent on a number of factors, many of which are outside of our control. Should events occur that result in noncompliance, we believe there are remedies available that are acceptable to our lenders and us.

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On July 2, 2004, we entered into a new $2.5 billion, five-year, senior unsecured credit facility that includes a $500 million non-amortizing term loan. This new credit facility matures July 2, 2009 and replaces a $2.25 billion, five-year credit facility that would have matured November 3, 2005. Amounts outstanding under this facility include the following:

As of January 1, 2005, we had $1.5 billion of debt and equity securities available for issuance under a shelf registration statement filed with the Securities and Exchange Commission.

The following table presents principal (or notional) amounts and related weighted average interest rates by year of expected maturity for our debt obligations and interest rate exchange agreements as of January 1, 2005.

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For obligations with variable interest rates, the preceding table sets forth payout amounts based on weighted average rates as of January 1, 2005, and does not attempt to project future interest rates. Approximately $109 million of our revenue bonds are supported by letters of credit that expire within one year. We have the intent and the ability to renew these letters of credit annually. Therefore, maturities of these obligations are reflected above in accordance with their stated terms.

The following table details activity in our debt ratings during 2004:

In 2004, we redeemed the following debentures:

During 2004, we recorded a pretax charge of $76 million for call premium fees and to write off deferred debt issuance costs due to early extinguishment of debt including prior credit facility fees.

Dividends

During 2004 and 2003, we paid dividends totaling $129 million and $126 million, respectively. On February 3, 2005, we announced that our Board of Directors increased our quarterly cash dividend by 40 percent to 17.5 cents per share from 12.5 cents per share. The increased dividend is equal to an annual rate of 70 cents per share compared with the previous annual rate of 50 cents per share.

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Contractual Obligations

The following table presents commitment amounts by year of expected expiration for our total debt, standby letter of credit agreements, operating leases, purchase obligations, and other long-term liabilities.

Off-Balance Sheet and Other Arrangements

We currently do not have any non-consolidated special purpose arrangements.

Guarantees and Indemnifications

We are a party to contracts in which we agree to indemnify third parties for certain liabilities that arise out of or relate to the subject matter of the contract. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by gross negligence or willful misconduct. We cannot estimate the potential amount of future payments under these indemnities until events arise that would trigger a liability under the indemnities.

Additionally, in connection with the sale of assets and the divestiture of businesses, we typically agree to indemnify the buyer of the assets and related parties for certain losses or liabilities incurred by the buyer with respect to (i) the representations and warranties made by us to the buyer in connection with the sale and (ii) the pre-closing operations of the assets sold. Indemnities related to pre-closing operations generally include environmental liabilities, tax liabilities, and other liabilities not assumed by the buyer in the transactions. See Note 17 of the Notes to Consolidated Financial Statements for a discussion of these indemnities.

Other Financing Arrangements

We have an accounts receivable secured borrowing program. G-P Receivables, our wholly-owned subsidiary, is the special purpose entity into which the receivables of participating domestic subsidiaries are sold. G-P Receivables, in turn, sells an interest in the receivables to various banks and entities. This program is accounted for as a secured borrowing. The receivables outstanding under these programs and the corresponding debt are included as “Receivables” and “Secured borrowings and short-term notes,” respectively, in the accompanying consolidated balance sheets. Under the borrowing program, as collections reduce previously pledged interests, new receivables may be pledged. See Note 6 of the Notes to Consolidated Financial Statements.

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Prior to 1996, we sold certain operating assets to an unrelated third party for $354 million and agreed to lease the assets back from the purchaser/lessor over a period of 30 years. Under the agreement with the purchaser, we agreed to maintain a deposit (initially in the amount of $322 million) that, together with interest earned thereon, was expected to be sufficient to fund our lease obligation, including the repurchase of assets at the end of the term. This transaction was accounted for as a financing arrangement. At the inception of the agreement, we recorded an asset for the deposit from the sale of $305 million and a liability for the lease obligation of $346 million on our balance sheet. The subsequent sale of these assets to Domtar Inc. in 2001 required us to repurchase these assets from the lessor. Accordingly, we agreed with the lessor to a deferred payment arrangement essentially under the same terms as the original lease obligation. We agreed to maintain the original deposit under our existing terms and create a second deposit. The sum of these deposits (approximately $400 million at December 29, 2001) approximates the deferred payment amount. A legal right of set off exists between the deferred payment amount owed and the deposits and, accordingly, we have recorded these transactions net in the accompanying consolidated balance sheets as “Other long-term liabilities.”

In conjunction with the pre-2000 sales of timberlands located in California and Maine, we received notes from the purchasers totaling $718 million. The notes received from the California sales were monetized through the issuance of notes payable in a private placement and through the issuance of commercial paper. The notes received from the Maine sale (the “Maine Notes”) were monetized through the issuance of notes payable in a private placement. The proceeds from such monetizations were used to repay debt. Proceeds from the notes received from the purchasers are being used to fund payments required for the notes payable and commercial paper. The notes receivable are classified as “Other assets” and the notes payable are classified as “Other long-term liabilities” on the accompanying consolidated balance sheets. The Maine Notes were issued by G-P Maine, Inc., an indirect, wholly owned subsidiary of ours. It is a separate corporate entity from us, and its assets will be available first and foremost to satisfy the claims of its creditors.

Results of Operations and Related Information

In this section, we discuss and analyze our 2004 net sales, operating profit and other information relevant to an understanding of our 2004 results of operations. In this discussion and analysis, we compare our 2004 results to 2003, and our 2003 results to 2002.

Analysis of Net Sales By Business Segment—Three Years Ended January 1, 2005

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Comparison of 2004 to 2003:

Consolidated net sales were flat in 2004 compared to 2003. We sold our building products distribution business on May 7, 2004 and, therefore, our 2004 operating results for this segment represent four months of operations compared with a full year in 2003. Excluding the net sales by the building products distribution segment and treating our intrasegment sales to this segment as outside sales, consolidated net sales for 2004 from our ongoing operations increased approximately 11% compared to 2003.

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Comparison of 2003 to 2002:

Consolidated net sales decreased 13% due to the November 2002 sale of a controlling 60% interest in Unisource, our paper distribution business. Excluding the net sales from this business, consolidated net sales for 2003 increased 9% compared to 2002.

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Analysis of Operating Profit (Loss) By Business Segment—Three Years Ended January 1, 2005