Georgia-Pacific Reveals Increasing Asbestos Claims
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Published October 25, 2002


Georgia-Pacific Corp., the paper and lumber company that has been plagued
by asbestos-related liabilities, said costs for lawsuits this year are 63
percent more than expected. 

Georgia-Pacific's stock has fallen by more than half this year, partly on
concern about asbestos lawsuits that have cost the company about $132 
million this year before recoveries from insurance. At the end of last 
month, the company faced 66,300 unresolved claims, 6.4 percent more than
a year earlier.

The unexpected costs ``don't do anything to make people more confident 
in the reserve that they took out last year,'' said Chris Karlin, fund 
manager for Kestrel Investment Management, which held 477,300 Georgia-
Pacific shares in June.

Georgia-Pacific should be able to pay the extra costs without 
significantly hurting profit, he said.  Georgia-Pacific had expected to 
pay about $81 million, or $27 million a quarter, to settle asbestos 
lawsuits in the first nine months of the year.  The higher payments mean
the $350 million reserve, or $221 million after taxes, created last year
is being depleted faster than planned.  The company said it will "review"
 the reserve at the end of this year. 

Insurance likely will pay a ``good deal more than half of what we're 
going to be paying out,'' James Kelley, the company's chief lawyer, 
said on the call. ``We've been reimbursed up to date for virtually all 
the costs that have been paid.'' 

He added that the increase in unresolved cases comes mainly from 9,500 
lawsuits filed in the quarter in Mississippi. Included in the costs was
a $10 million payment in the quarter after the company lost an appeal 
of a verdict in Maryland, Mr. Kelley said.