SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 17, 1997
(Date of Report)
GEORGIA-PACIFIC CORPORATION
(Exact Name of Registrant as Specified in its Charter)
GEORGIA
(State of Incorporation)
1-3506
(Commission File Number)
93-0432081
(IRS Employer Identification Number)
133 PEACHTREE STREET, N.E., ATLANTA, GEORGIA 30303
(Address of Principal Executive Offices)
(404) 652-4000
(Registrant's Telephone Number, including area code)
ITEM 5. OTHER EVENTS.
On December 16, 1997, the Corporation issued the following press release.
NEW YORK -- Shareholders of Georgia-Pacific Corp. (NYSE: GP) today approved
creation of a new class of common stock that will separately reflect the
performance and value of the company's timber business, which will be known as
The
Timber Company. The new Timber Company common stock, which will trade on the
New
York Stock Exchange beginning Wednesday under the symbol "TGP," will be the
largest pure timber equity investment available in North America.
Effective today, Georgia-Pacific's existing common stock will be
redesignated
as Georgia-Pacific Group common stock, which will retain the "GP" symbol on the
New York Stock Exchange, and separately reflect the performance of the company's
pulp, paper and building products businesses. The company promptly will
distribute
one share of the newly created class of Timber Group common stock for each share
of
Georgia-Pacific Group common stock to shareholders of record today. The
creation
of two classes of common stock is designed to increase shareholder value by
separating the cash flows and performance of the distinct businesses, while
at the
same time enabling Georgia-Pacific to retain its timber assets and the tax and
credit advantages of doing business as a single company.
"This recapitalization represents a complete new way of thinking about
timber
- -- not just as a resource to supply plants and mills, but as an extremely
valuable
product in itself. Unlocking that latent value for our shareholders by creating
two separate classes of common stock, and separating the predictable and stable
cash flow of our timber business from those of our more cyclical manufacturing
businesses, should result in greater market recognition of the value of each of
these businesses," A.D. "Pete" Correll, chairman and chief executive officer,
reported to shareholders.
Donald L. Glass, a 25-year veteran of Georgia-Pacific, will serve as The
Timber Company's president and chief executive officer, reporting to Correll.
"The Timber Company will enter the new year under Don's leadership with an
intensive focus on driving value and generating cash specifically from our
timber
resources. Its strategic goal is to increase growth rates significantly on our
timberlands in order to harvest greater volumes, while simultaneously increasing
the inventory of our standing timber," Correll said. "The Timber Company will
focus on growing and selling timber, and will do so in a manner that protects
and sustains our natural resources."
At the special meeting in New York today, Correll reported to shareholders
that the company's total debt and Georgia-Pacific Group debt were within the
established targets, enabling the company to begin repurchases of
Georgia-Pacific
Group common stock. "We have long believed that share repurchases are the most
efficient way to return cash to our shareholders, so we are pleased to resume
our share repurchase program," he said.
Correll also reported that the company is analyzing more aggressive
alternatives to return its building products distribution division to
profitability. This likely will involve a significant writeoff in the 1997
fourth quarter. In addition, Correll said the company expects fourth-quarter
writeoffs related to an idled gypsum facility, other miscellaneous one-time
costs, as well as costs previously capitalized for information systems
reengineering. "As you know, we undertook a significant effort to increase
pretax profits that involved expenditures for information systems
reengineering," he told shareholders. "Under a new regulation, the SEC has
indicated that companies cannot capitalize certain of these costs. Therefore,
we and other companies are expensing them. Combined, these writeoffs will
result in a fourth-quarter net loss for Georgia-Pacific."
Correll added that while the company is experiencing weaker pulp prices and
taking downtime at several mills to avoid building excess inventories, its
operations remain strong.
Separation of the Timber Group from the company's pulp, paper and building
products businesses will enable each group to either retain its cash flow for
reinvestment in its business or to return cash to its shareholders in the form
of
dividends or share repurchases. Currently, the Georgia-Pacific Group can
repurchase shares when its debt falls below $4.5 billion and total company
debt is
below $5.5 billion, while the Timber Group can repurchase shares when its debt
falls below $1 billion and total company debt is below the target level.
Investors in The Timber Company stock will benefit from the relatively
stable
cash flows of that business and the anticipated continuing real growth in timber
prices. The Timber Company is the third largest private timberland owner in
North
America. Investors in Georgia-Pacific Group stock will benefit from the
operating
leverage of a cyclical commodity business that has reduced annual capital
spending
to a normalized level of approximately $750 million a year, significantly
lowered
its overhead costs and adopted a more disciplined approach to investing capital.
The company anticipates paying an annual dividend of $1 per share on both
Georgia-Pacific Group stock and The Timber Company stock, consistent with the $2
per share annual dividend currently paid to Georgia-Pacific shareholders.
Shareholders also approved creation of two new long-term incentive plans,
one for each group, which allow for the granting of stock options, restricted
stock awards and performance awards. Finally, shareholders approved changes to
the 1995 Shareholder Value Incentive Plan to suspend granting of additional
options under that plan and to convert outstanding stock options into options to
purchase equal numbers of shares of Georgia-Pacific Group stock and The Timber
Company stock.
The Timber Company will operate approximately 5.4 million acres of owned
timberlands in the United States and Canada, and manage an additional 400,000
acres
under long-term leases. Approximately 70 percent of the timberlands are in the
South, 20 percent in the North and 10 percent in the West. It will plant in
excess
of 125 million seedlings each year and aggressively manage its forests to
maximize
growth and productivity. It also will be engaged in certain businesses related
to
ownership and management of timberlands, including managing hunting leases and
mineral reserves as well as seedling production.
Timber group sales were $547 million in 1996 and $493 million in 1995.
Operating profits for the timber business were $313 million in 1996 and $271
million in 1995. The business' 1996 pro forma earnings per share were $1.40,
compared with $1.08 in 1995. For the first nine months of 1997, sales were $420
million with an operating profit of $254 million (excluding a $114 million
gain on
the sale of Martell, Calif., timberlands). Approximately $1 billion of the
company's total debt has been allocated to The Timber Company.
Georgia-Pacific Group is one of the world's leading manufacturers and
distributors of pulp, paper and building products. It is the largest U.S.
producer
of structural and other wood panels, the nation's largest wholesale distributor
of
building products, and the second largest producer of lumber, market pulp,
communication papers and containerboard. It also is a leading manufacturer of
consumer and commercial tissue products.
Georgia-Pacific Group operates 81 pulp and paper manufacturing facilities
in the United States and one in Canada, as well as 153 building products
facilities in the United States and seven in Canada.
Certain statements contained in this release, including statements
regarding future timber prices, growth rates and harvest and inventory levels,
and the expected effects of the transaction on shareholder value, as well as
other statements which are not historical facts, are forward-looking statements
(as such term is defined under the Private Securities Litigation Reform Act of
1995) based on current expectations. The accuracy of such statements is subject
to a number of risks, uncertainties and assumptions including, but not limited
to, the effect of general economic conditions, market demand risks, the effect
of government, legislative and environmental restrictions, the risk of losses
from fires, floods and other natural disasters, and future timber growth and
yield responses in accordance with management's present expectations. In
addition, factors that could cause or contribute to actual results differing
materially from such forward-looking statements include those risks,
uncertainties and assumptions discussed in the company's Securities and Exchange
Commission filings, including its Registration Statement on Form S-4 No. 333-
35813.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: December 17, 1997
GEORGIA-PACIFIC CORPORATION
By /s/ James F. Kelley
James F. Kelley
Senior Vice President - Law and General
Counsel
