In 2004, we posted sales of $5.7 billion, a 23% increase from sales in 2003, and net income of $94.2 million, compared with a net loss of $47.4 million in 2003. Our 10,000 employees share common values of safety, integrity, and quality and a focus on serving customers.
Boise's total sales reflect only our sales to external customers and do not include sales by one Boise business to another. However, sales among businesses are included in the sales figures for each business. Consequently, the company's total sales figure is less than the total of the sales for each of our businesses.
Boise Paper — 2004 sales $1,370.5 million
We manufacture uncoated free sheet paper, including commodity and value-added grades, and market pulp and corrugating medium at four mills in the United States. We are the fourth-largest manufacturer of uncoated free sheet in North America, with annual production capacity of approximately 1.6 million short tons (2,000 pounds per ton) in 2004. Our uncoated free sheet products include cut-size office paper, commercial printing paper, paper for business forms and envelopes, and value-added papers. Our value-added grades include bright and colored cut-size office papers and specialty papers that are custom-developed for various uses, including label and release, security, and food wrap applications.
Boise Packaging & Newsprint — 2004 sales $694.5 million
We manufacture linerboard and newsprint at our mill in DeRidder, Louisiana. This mill is one of the largest paper mills in North America, with annual production capacity of 1.0 million short tons in 2004. Our newsprint is used primarily for printing daily newspapers and other publications in North America. We also manufacture corrugated containers at five plants in the Pacific Northwest with an aggregate annual capacity of approximately 4.5 billion square feet. Our corrugated containers are used to package fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. During 2004, our corrugated container plants consumed (either directly or through trades with other containerboard producers) approximately 54% of our containerboard production, including the linerboard manufactured at our paper mill in DeRidder and the corrugating medium manufactured by our Boise Paper segment.
Boise Wood Products — 2004 sales $1,360 million
We are a leading producer of engineered wood products through our integrated network of three engineered wood products facilities and ten plywood and veneer plants. Our engineered wood products include laminated veneer lumber (LVL), a high-strength engineered lumber often used in beams; I-joists, a structural support typically used in floors and roofs; and laminated beams. We are the second-largest engineered wood products manufacturer in North America. We also produce dimension lumber and high-quality ponderosa pine lumber (a premium lumber grade sold primarily to manufacturers of specialty wood windows, moldings, and doors) at five sawmills and particleboard at one plant. Our wood products are used in new residential and light commercial construction and residential repair and remodeling. Boise's building materials distribution business is the largest customer of our Wood Products segment, representing approximately 30% of its overall sales, including more than 58% of its engineered wood products sales.
Boise Building Materials Distribution — 2004 sales $2,844.1 million
We are a leading national inventory-carrying wholesale distributor of building materials. We distribute a broad line of building materials, such as engineered wood products, oriented strand board, plywood, lumber, siding, and general-line items such as framing accessories, composite decking, roofing, and insulation, most of which we purchase from third parties. We believe our broad product line provides our customers with a one-stop resource for their needs and lower per-unit freight costs. We also have expertise in special-order sourcing and merchandising support, and our nationwide supplier relationships allow us to offer excellent customer service on top brands in the building materials industry. We operate 28 wholesale building materials distribution facilities located strategically throughout the United States.
We intend to build on our successful customer relationship with OfficeMax to become a preferred supplier of cut-size office papers to a greater portion of the commercial and retail markets. We plan to work closely with our customers to develop and manufacture innovative value-added papers and service programs that respond to their changing needs and technical products. We plan to further expand our market position in engineered wood products, and we intend to continue to expand our building materials distribution network into new geographic markets and to aggressively grow in our existing markets. We have identified significant potential improvements in operating cash flow that we expect to pursue aggressively, including energy efficiency projects, operational optimization of our paper and wood products facilities, productivity and technology enhancements, and reduction of operating and corporate overhead. We are also focusing on managing capital expenditures and working capital and aggressively monetizing noncore and nonoperating assets.
Boise and the Environment
Our employees are dedicated to continuously improving our management practices in wood fiber procurement, conserving energy, keeping air and water clean, recycling, and developing products that conserve natural resources. To assess our sustainable fiber procurement program, an independent third party audits and certifies our practices against the rigorous standards set by the Sustainable Forestry Initiative® (SFI®) program. We audit our manufacturing facilities every three to five years to assure we are using the latest techniques to protect air and water quality. Innovative and environmentally conscious products we make include 30% and 100% postconsumer recycled-content office papers and I-joists and laminated veneer lumber that use nearly 50% less wood than solid wood products. We also continuously explore ways to reduce energy consumption. Sources of self-generated energy, such as wood wastes, pulping liquors, and hydroelectric power, provide 59% of the energy needed by our paper operations.