<PAGE>
Filed by Georgia-Pacific Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Fort James Corp.
Commission File No. 1-7911
Contact Name: Richard A. Good
<PAGE>
[LOGO OF GEORGIA-PACIFIC]
Georgia-Pacific
Analyst Presentation
July 18, 2000
<PAGE>
Safe harbor
This presentation contains certain "forward-looking statements" within the
meaning of federal securities laws about our financial condition, results of
operations and business.
You can find many of these statements by looking for words such as
"believes", "expects," "anticipates", "estimates", or similar expressions used
in this presentation.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause our actual results, performance or achievements
to be materially different from our assumptions about future results,
performance or achievements expressed or implied by us in those statements.
Because forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied by such
statements. You are cautioned not to place undue reliance on such statements,
which speak only as of the date of this presentation.
The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that we or persons acting on our behalf may issue. We undertake no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this presentation or to reflect the
occurrence of unanticipated events. We discuss many of the assumptions in our
filings with the SEC and you should review them.
<PAGE>
Summary of transactions
. Fort James
. Step-change in G-P's portfolio
. Creates world's largest tissue company
. Expands one of the greatest core-competencies of G-P
. The Timber Company
. Reinforces image of breaking from conventions of forest products industry
myths
. Creates tremendous value for Timber Company shareholders
<PAGE>
These key moves are part of a transformation towards:
. Generating more stable and predictable earnings
. Achieving higher levels of profitability
. Focusing on growth in value through improving the portfolio of assets
. well-timed acquisitions and divestitures
. continued capital discipline
. improving returns while reducing risk
. Enhancing GP's historical financial strategy of returning excess cash to
shareholders
<PAGE>
Agenda
. Strategic Overview
. Acquisition of Fort James to create a global tissue leader
. Spin-off/merger of TGP to unlock share value
. Financial Overview
. Summary
<PAGE>
Strategic Overview
<PAGE>
The goal is to decrease the volatility and increase
the quality of cash flows to enhance value
[GRAPH OF EXISTING BU MARKETS]
[GRAPH OF PROBABILITY OF RETURN ON CAPITAL]
<PAGE>
How are we going to improve shareholder value?
We are focusing management on value-added products
and services driven by customer needs...
From...
. Selling undifferentiated commodities
. Competing in highly fragmented industry segments
. Operating asset-based businesses competing primarily on price
. Owning businesses across the entire value chain
...To
. Marketing value-added products and services
. Participating in less fragmented businesses
. Combining operational excellence with customer intimacy to expand points of
differentiation
. Focusing on finished-product end of the value chain
...to decrease volatility and increase quality of cash flows
<PAGE>
Moving forward in the value chain
FROM...competing as a leader in operational excellence focusing on the commodity
area of the value chain
[GRAPH DOMTAR GYPSUM]
TO...leveraging operational excellence and moving closer to the customer by
providing increasingly differentiated, customer-focused products and
services
[GRAPH MIGRATION PATH]
<PAGE>
Fort James Acquisition
<PAGE>
Overview of Fort James acquisition
. Results of strategic analysis, recent stock price performance of Fort James
and success with the Wisconsin Tissue integration led to our initiation of
this transaction
. Subsequent discussions resulted in a reasonable price at an attractive time
. EPS accretive across the cycle
. Synergies reach full run rate of over $500 million p.a. in 2002
. Best management will run the new business
<PAGE>
Transaction terms:
Transaction: 80% cash, 2-% stock acquisition of Fort James
Consideration: $29.60 in cash and 0.2644 Georgia-Pacific shares per
Fort James share (up to maximum of $40.00 in value
delivered per FJ share) $37.17 as of 7/14
Enterprise Value: Approximately $11.3 billion
Transaction Structure: Exchange offer
Pro Forma Ownership: Georgia-Pacific 74%, Fort James 26%
Board of Directors: 12 existing Georgia-Pacific directors plus 3 new
directors from Fort James
Senior Management: Executive management from Georgia-pacific to remain.
Selected Fort James operational management to be
retained
Expected Closing Date: Forth quarter of 2000
<PAGE>
Strategic rationale for the acquisition
Major step in the transformation of Georgia-Pacific to a more stable, higher
value-added business
Business Unit Value
. More than doubles tissue business, making it a leader in the NA market
. Provides substantial European presence with strong brands and management
. Best operator in the business moving more heavily into value-added products
on a global scale
Synergy Value
. Expands a business in which Georgia-Pacific has a proven track record
. Utilizes Georgia-Pacific's operating capabilities to unlock in excess of $500
million of annual pre-tax synergies
Corporate Value
. Moves Georgia-Pacific's portfolio closer to the customer by increasing sales
of branded products
. Strengthens consumer focus with the addition of several well-known brand
names (e.g., Brawny, Quilted Northern(R), Mardi Gras(R), Vanity Fair(R),
Soft'n Gentle(R), Lotus(R) and Dixie(R))
. Reduces the volatility and risk of pro forma cash flows providing a more
stable platform for the future
<PAGE>
Financially disciplined acquisition
Acquisition at a reasonable price at an attractive time
[Graph]
. Tissue Fiber costs stabilizing
. Improving free cash flows from paper cycle
. Europe stabilizing with upside potential
<PAGE>
Tissue products - Attractive pricing dynamics
[Graph]
Source: Bureau of Labor Statistics.
<PAGE>
Company Overview
Fort James
[Graph]
2000E Revenue Breakdown
Dixie 11%
Papers & Fiber 12%
Europe Tissue 24%
North America Tissue 53%
2000E Statistics*
($ in Billions)
Sales $7.1
EBITDA $1.4
% Margin 20.0%
EBIT $0.9
% Margin 13.2%
Strengths
. Leading brand names
. Established market position
. Low cost producer
. Innovative products
* Source: Wall Street equity research.
<PAGE>
Fort James tissue mill sites
[Map of U.S.]
. Camas
. Clatskanie
. Halsey
. Green Bay
. Muskogee
. Pennington
. Rincon
. Old Town
* Camas
* Clatskanie
. Tissue
* Communications Papers
<PAGE>
Fort James North American Tissue Operations
# of Tissue Capacity
Location Machines (in 000s) Furnish
------------------------------------------------------------
Green Bay - East 5 180 Virgin/Deink
Green Bay - West 9 410 Deink
Old Town 2 87 Virgin
Savannah (Rincon) 5 377 Deink
Noheda 5 260 Virgin
Muskogee 5 331 Deink
Halsey 2 98 Deink/Virgin
Wauna (Clatskanie) 3 195 Virgin/Deink
Camas 6 149 Virgin/Deink
-- -----
42 2,088
== =====
Additional:
Wauna: 1 UFS Machine (110K)
Camas: 6 UFS Machines (417K0
<PAGE>
Fort James European tissue operations
[Map of Europe]
Stubbins, UK
Gridgend, UK
Oughtibridge, UK
Cuiji, Netherlands
Hondouville, France
Gien, France
Kunheim, France
Allo, Spain
Castelnuovo, Italy
Avigliano, Italy
Patras, Greece
Karamursel, Turkey
Nokia, Finland
<PAGE>
Fort James European tissue operations
Capacity
Non-integrated Machines (in 000's)
France 5 135
Greece 1 20
Italy 2 75
Spain 2 100
Turkey 2 40
Sub-Total 12 370
De-Inked
Finland 3 105
France 2 75
Netherlands 2 70
U.K. 8 235
-- ---
Sub-Total 15 485
-- ---
Total European 27 855
-- ---
<PAGE>
Dixie(R) operations
. Leading branded manufacturer of disposable plates and cups
. $800 million in annual sales
. Raw material base
. Paperboard (largely integrated), paper, plastic resins
. Plant Base
. 11 converting plants in the U.S. and Canada
[MAP APPEARS HERE]
<PAGE>
Company overview
[LOGO OF GEORGIA PACIFIC]
2000E Statistics*
($ in Billions)
Sales $21.5
EBITDA $ 2.9
% Margin 13.4%
EBIT $ 2.0
% Margin 9.3%
* Source:Wall Street equity research.
Strengths
. Experienced and proven management team
. Strong operating track record
. Proven ability to integrate acquisitions
[PIE CHART]
<PAGE>
Pro forma business mix
Mix shifts towards businesses with more
predictable earnings and cash flow
[GRAPH APPEARS HERE]
<PAGE>
Fort James business mix is a good strategic fit
Leading Strong Product
Market Brand Distribution Rationalization
Segment Position Names Synergies Opportunities Comments
------- -------- ------ ------------ --------------- --------
North American . Low cost
Tissue X X X X producer
. Proven track
record
. Strong
customer
relationships
. Capex savings
opportunities
European Tissue X X . Foothold for
growth
. Market
improvement
potential
Dixie X X X . High value-
added
products
. Consumer
focused
Communications
Paper & Fibers X X . Leading
producer in
Western U.S.
. Improved
profitability
potential
within
Georgia-
Pacific
system
<PAGE>
Fort James' tissue provides an excellent fit
. G-P will become:
. an international tissue company capable of serving global retailers. 75%
of the top 20 global retailers now conduct business in countries outside
of North America
. a full-line tissue manufacturer with a very low cost position
. G-P will acquire:
. premium tissue and towel brands to complement Angel Soft and Sparkle
. sufficient manufacturing capacity to support private label product
offerings
. significant technical, research & development capabilities to support
product and manufacturing process innovations
<PAGE>
Synergy opportunities
[GRAPH SYNERGIES REACH FULL RUN RATE OF
$200 MILLIOM IN 2002]
<PAGE>
Why will we be able to successfully deliver on this acquisition?
Recent Acquisitions Pre-Acquisition Goal Performance to Date
CeCorr Achieve an average annual 18% ahead of plan
cash flow of $20.4 mm in first full year
of operation. Full
year 2000 estimates
above plan
Unisource Capture $56 mm in synergies $84 mm achieved ahead
in the first year of plan ($25 mm over
pre-acquisition
target)
Wisconsin Tissue Complete organization Accomplished on, or
integration, product ahead of plan
rationalization and order
management system
consolidation within
6 months
Domtar Gypsum Achieve above cost of capital Acquired the business
return on investment for $363 mm in 1997.
Generated $954 mm in
EBIT in first 3 years
following acquisition
Recent acquisitions demonstrate Georgia-Pacific's
ability to deliver on promises
<PAGE>
Synergy Comparison
[GRAPH OF SYNERGIES AS A PERCENT OF TARGET REVENUE]
<PAGE>
We achieved all key Wisconsin Tissue JV milestones established for the first 180
days
Oct. 99 New product line approved
Eliminated almost 300 SKU's (40% reduction)
Key to realizing $15 million of manufacturing synergies
Oct. 99 New organization structure approved
Eliminated over 200 positions
$15 million of annual savings
Dec. 99 Integrated business plans in place for 2000
New sales force in place
Jan 00 Customer service centers consolidated
Financial and salaried payroll systems consolidated
A/P and payroll functions moved to shared service centers
Apr. 00 Integrated product line in production
Single order management system in place (SAP)
Hourly payroll systems
<PAGE>
Wisconsin Tissue - Aggressive product line integration
Goals
. Rationalized and integrated product line
. Full product line with definable quality tiers
. Flexibility in siting paper production and converting for financial benefits
. Available for 4/1/2000 roll-out
Accomplishments
. Quality tiers defined: Proprietary (Control)
Park Avenue Ultra
Coronet
Main Street
Second Nature
Specialty/Private Label
. Standard stock items reduced from 165 to 101 (39%)
. Dispensers reduced from 125 to 66 (47%)
. Specialty items reduced from 389 to 213 (45%)
<PAGE>
Historical tissue business results
[GRAPH OF SALES VOLUME GROWTH--CONSUMER]
[GRAPH OF SALES VOLUME GROWTH--AFH /(1)/]
[GRAPH OF EBITDA GROWTH /*(2)/]
G-P's Tissue has averaged 16% ROCE over the past 8 years
(1) The Away From Home business includes the Wisconsin Tissue operations
beginning in fourth quarter 1999. Prior to 1997, growth was constrained by
paper availability.
(2) Tissue industry pricing peaked in 1996, and gradually declined over the next
3 years due to continued weak pulp markets. Steady financial results were
achieved in spite of these price declines.
<PAGE>
Management team
. Management team in place have:
. strong operating track record
. delivered synergies at Wisconsin Tissue
. Financial management of Georgia-Pacific remains in place
. Continuity of management in European Tissue and Dixie
<PAGE>
Summary of Fort James acquisition
. Major step in the transformation of Georgia-Pacific towards higher value-
added business with more stable and predictable earnings and cash flow
. Fort James' business mix is a good strategic fit
. Fort James' strong brand names move Georgia-Pacific closer to the customer
. Acquisition at a reasonable price at an attractive time
. Synergies reach full run rate of over $500 million p.a.
. EPS accretive across the cycle
. Best management team running the new business
<PAGE>
The Timber Company
<PAGE>
Separation of The Timber Company has been a success
. "Win-Win" for G-P and TGP
. G-P Group has new sources of timber and is doing a better job at procuring
wood at the lowest possible cost
. Separation has uncovered true operating performance of manufacturing
without subsidies
. TGP has been able to opportunistically time the sale of timberlands,
realizing the highest possible value
. TGP's value has not been fully reflected in the stock in our opinion
. The potential next logical step is a total spin-off
. A spin combined with a merger with Plum Creek will be a "home run"
<PAGE>
Transaction terms:
Transaction: Two step spin-merger involving a spin-off of TGP and a
subsequent exchange for PCL shares
Consideration: 1.37 PLC shares per TGP share
Valuation: $37.51 per share value in stock based on PCL current market
price ($27.375 on 7/17/00)-55% nominal premium to TGP price
of $24.25
Additional cash dividend per share of approx. $1.50 to TGP
shareholders, assuming a post transaction E & P distribution
of $2000MM
Tax Treatment: Pending IRS Ruling:
. Spin-off will be tax free to G-P and TGP shareholders
<PAGE>
TGP exchange ratio is fair to our shareholders
. This offer price is a premium to:
. Prior day closing stock price of $24.25
. TGP's 52-week high of $27.19
. Wall Street analyst price targets
- Merrill Lynch $29
- Morgan Stanley $33
- Salomon Smith Barney $32
. The offer price represents 11.7x 2000E TEV/EBITDA
. Dividend per share for TGP shareholders increases from $1.00 to $3.12 per
equivalent TGP share
<PAGE>
Plum Creek Timber Co.
Overview
. 4th largest private owner of timberland in US with 3.2MM acres
. Lumber capacity 743 mmbf
. Plywood capacity 337 mmsf
. MDF capacity 136 mmsf
2000E Statistics*
($ in Millions)
Sales $750
EBITDA $230
% Margin 30.3%
EBIT $155
% Margin 20.6%
2000E Revenue Breakdown
[PIE CHART OF 2000E REVENUE BREAKDOWN]
Timber 42%
Land Sales 4%
Lumber 36%
Panels 18%
Strengths
. Highly attractive asset base
. Strong management focused on shareholder returns
. Good corporate structure to hold and grow timber assets
<PAGE>
Overview of PCL timberland holdings
[MAP OF UNITED STATES]
Cascade Region
285,000 Acres
2.1BBF of Merchantable Timber /(1)/
Rocky Mountain Region
1,488,000 Acres /(2)/
6.8BBF of Merchantable Timber /(1)/
9 Conversion Facilities
Northeast Region
912,000
2.8BBF of Merchantable Timber /(1)/
24MM tons of Pulpwood
Southern Region
523,000 Acres
2.4BBF of Merchantable Timber
2 Conversion Facilities
(1) Inventory as of 1/1/00.
(2) Pro forma for sale of 91,000 acres to Crown-Pacific
<PAGE>
Pro forma PCL will become the 2nd largest private timberland owner in the US
[MAP OF UNITED STATES]
Cascade Region
0.6 million Acres
Rocky Mountain Region
1.5 million Acres
Northeast Region
1.4 million Acres
Southern Region
4.5 million Acres
Total Pro Forma Timberlands 8.0 million Acres
<PAGE>
The merged company will be the preeminent investment vehicle in the timber
industry
PCL will have more substantial cash flows for distribution
to shareholders and for acquisitions
TGP PCL /(1)/ Pro Forma /(2)/
Financial
2000E FFO (3) $ 287 $ 160 $ 414
2000E EBITDA 332 225 567
Enterprise Value (4) 2,919 2,606 5,175
Equity Value (4) 1,919 1,940 3,859
(1) No taxes included except for TGP tactical land sales. One-time gain not
included in 2000 for PCL
(2) Pro Forma Cash Flow items include synergies of $10MM
(3) FFO defined as net income plus D&A and cost of timber harvested. FFO
excludes taxes
(4) As of July 14, 2000
Source: Wall Street estimates.
<PAGE>
The spin-off of TGP will not disrupt G-P's timber supply
. Over 80% of G-P's timber is from other sources
[PIE CHART OF G-P'S TIMBER SUPPLY]
17% Sourced from TGP
83% Sourced from 3rd Parties
. Supply agreements will cover all the G-P facilities that significantly rely
on The Timber Company furnish
. Only 6 sawmills and 4 panel plants derive more than 25% of their furnish from
TGP lands
<PAGE>
The Timber Company transaction summary
. Impact for The Timber Company shareholders:
. Delivers 55% premium and increased dividend to TGP shareholders
. Creates the premier timber investment
- diversified timber portfolio - major timber presence in all significant
regions in the US
- increase size and liquidity of combined company
. Increases ability to grow timber ownership
- corporate structure improves opportunities for growth through
acquisition
. TGP shareowners will own 62% of the merged company
. Impact for Georgia-Pacific Group shareholders:
. Consistent with move away from raw material commodity-based business
. G-P still has access to the timber (supply agreement)
<PAGE>
Financial Overview
<PAGE>
Financial objectives
. Generate excess cash in all markets to return capital through share
repurchases
. Continue capital spending discipline
. Enhance predictability of earnings
. Exhibit financial discipline in all acquisitions
. Achieve operational efficiencies/realize synergies
. Maintain target debt level and investment grade credit ratings to minimize
cost of capital
<PAGE>
2000E Pro forma financials
($ in Billions)
Georgia-Pacific Fort James Combined /(a)/
Sales $21.5 $ 7.1 $28.6
EBITDA $ 2.9 $ 1.4 $ 4.3
% Margin 13.4% 20.0% 15.0%
Operating Profit $ 2.0 $ 0.9 $ 2.9
% Margin 9.3% 13.2% 10.2%
*Source: Wall Street equity research
(a) Represents a simple summation and does not include synergies and pro forma
adjustments
<PAGE>
Pro forma financials
($ in Billions)
Georgia-Pacific /(a)/ Fort James /(a)/ Pro Forma /(b)/
Assets $15.6 $ 7.1 $29.6
Debt $ 6.1 $ 3.5 $16.0
Common Equity $ 3.9 $ 1.0 $ 5.4
Debt/Total Cap. 61.2% 77.3% 74.6%
Debt/EBITDA /(c)/ 2.3x 2.6x 4.0x
Int. Coverage /(c)/ 5.7x 5.8x 3.2x
(a) Balance sheet as of Q1/2000
(b) Adjusted for Goodwill, debt and shares issued
(c) EBITDA and Interest LTM as of Q1/2000
<PAGE>
New target debt level is in line with historical financial discipline
. New target debt level is $9.5 billion
. At this debt level, credit ratios equal or exceed current combined ratios
. Expect to reach target debt level in 2 to 3 years and then resume share
repurchases
<PAGE>
EPS Accretion/Dilution
Transaction is accretive to cash EPS in all years and to
reported EPS in 2002 and beyond
Incremental EPS Effect
[CHART OF INCREMENTAL EPS EFFECT]
<PAGE>
Summary
<PAGE>
Summary
Georgia-Pacific will maintain its core values while
undergoing portfolio transformation
. Generate more cash flow across all markets to return to shareholders
. Customer driven
. Operational excellence
. Adding value through improving portfolio returns while reducing risk
