<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>
July 17, 2000
Headlines:
> Transforming Georgia-Pacific
> The right transaction at the right time
> A catalyst for improved future performance
Strategy:
"Our strategy is to transform Georgia-Pacific by transforming our portfolio of
assets," said A.D. "Pete" Correll, chairman and chief executive officer.
"Today's actions and future divestitures will create value by sharpening our
focus on higher-margin businesses that are closer to the customer.
Georgia-Pacific's transformation will improve earnings predictability,
strengthen our market position and drive the increased cash flow needed to take
our long-standing financial strategy to the next level."
Key Messages:
[_] This acquisition is well-timed and will combine with additional
steps that are reshaping Georgia-Pacific, a process we began with
the separation of our timber assets in late 1997 and carried
forward last year with the acquisitions of Wisconsin Tissue and
Unisource.
[_] Advancing this operating strategy moves us even further in the
direction of the higher value-added segments of our industry.
This acquisition -- which is immediately accretive to
Georgia-Pacific Group on a cash flow basis, and accretive to our
earnings beginning in the second full year -- means higher
margins, improved earnings predictability and the increased cash
flow needed to continue to pursue our long-standing financial
strategy of returning excess cash to shareholders.
[_] By divesting selected commodity and non-strategic businesses, the
transformed Georgia-Pacific will be able to focus on those paper
and building products businesses that are valued-added and fit
our strategic direction.
[_] The addition of Fort James creates the world's leading tissue
manufacturer. Tissue is a segment in which Georgia-Pacific has
demonstrated both operational excellence in manufacturing and
logistics and outstanding sales and marketing capabilities.
Adding Georgia-Pacific's low-cost manufacturing capabilities to
Fort James' strong consumer brands and nationwide marketing will
result in greater efficiencies, more vigorous competition in the
retail market and broader distribution of commercial products.
[_] With four acquisitions in the last five years, Georgia-Pacific
has a proven track record of successfully integrating acquired
businesses and rapidly achieving synergies.
###
<PAGE>
To: All Georgia-Pacific Consumer Product Employees
All Georgia-Pacific Brokers
From: Mike Burandt
Subject: Proposed Acquisition of Fort James
This morning, Georgia-Pacific announced that a merger agreement has been
approved under which G-P would acquire Fort James. We are very excited about
this tremendous opportunity for our company and our division. Georgia-Pacific
will be able to offer our customers a "total" paper portfolio, increased supply
opportunities, focused research and development programs, and an even better
delivery of customer service and value. It also provides a wealth of
opportunities for our manufacturing, sales, marketing, customer services,
support and all other teams to grow and prosper as a part of the world's largest
tissue manufacturer.
This proposed transaction is subject to the appropriate government approvals, a
process that is expected to take several months. In the meantime, it is
important that we adopt a "business as usual" attitude. We need to reassure our
customers that all Georgia-Pacific brands will continue to be offered and
supported and that there will be no change in the Georgia-Pacific sales force,
broker representation or customer service functions.
I'm sure you've noticed from the official announcement (a copy is attached) that
G-P also is preparing to divest approximately 250,000 tons of tissue
manufacturing capacity for away-from-home products. I know that there are a lot
of questions about those initiatives, but at this point we simply have not made
any decisions. As we move forward, we plan to be as open as possible with you
and to stay ever mindful of the impact those decisions have on all employees.
The exact structure of the new, combined organization has not yet been finalized
and cannot be until the regulatory process is finished. Thus, it's important
that we not speculate with our customers about what may happen. Also, until the
transaction has been finalized, Fort James and Georgia-Pacific are still
competitors and, therefore, cannot interact for legal reasons.
We are now in the process of communicating this announcement to all G-P
employees, our customers and vendors, government officials and others. Any
specific customer inquiries regarding the transaction should be directed to your
manager or to John O'Donnell (404-652-8396) or to Kelly Breslin in the Law
Department (404-652-4846).
We know this is an uncertain time and that you have many questions. I promise to
share information with all of you just as soon as I can. In the meantime, the
best thing for Georgia-Pacific, our entire staff and our customers is to stay
focused on running our business as best we can and to meeting our customers
needs.
<PAGE>
To: All Georgia-Pacific Packaged Products Division and Georgia-Pacific
Tissue Valued Customers
From: Michael C. Burandt
Senior Vice-President, Packaged Products Division
Subject: Proposed Acquisition of Fort James
This morning, Georgia-Pacific Corporation announced that a merger agreement has
been approved which will result in the acquisition of Fort James by Georgia-
Pacific. The text of this announcement is attached. Georgia-Pacific is excited
about our new opportunity together. Our new organization will provide you
greatly increased benefits.
Georgia-Pacific will be able to offer you a "total" paper portfolio, increased
supply opportunities, focused research and development programs, and an even
better delivery of customer service and value.
This transaction is subject to appropriate government approvals, a process that
is projected to take several months. All Georgia-Pacific brands and products
will continue to be supported with sales and marketing programs. There will be
no immediate changes to the Georgia-Pacific or Georgia-Pacific Tissue sales
forces, broker representation, distributors or customer service functions.
During this period we will be seeking input from you on what you value and how
we best can deliver it. We will make every effort to advise you well in advance
of our plans.
The exact structure of the new, combined organization cannot be finalized until
the regulatory process has been completed. We will continue to keep you posted
as the process moves along and new information becomes available. Until then,
please know that Georgia-Pacific and Georgia-Pacific Tissue value your business
and will continue to strive to deliver the best service and value in the
industry. Do not hesitate to call your sales representative or me with any
specific questions that you may have.
Michael C. Burandt
<PAGE>
Tissue Products Overview
Georgia-Pacific Group Consumer Packaged Products: Quality bath tissues, paper
------------------------------------------------
towels and napkins sold in mass merchandise stores, such as Wal-Mart, K mart and
Target, and in large grocery and pharmacy chains.
Brand Names: Angel Soft(R) Sparkle(R) Coronet(R)
MD(R) Delta(R)
Production Capacity: 560,000 tons per year of parent roll capacity directed
to consumer tissue and 155,000 tons directed to
Georgia-Pacific Tissue L.L.C. Additional 80,000 tons
per year under construction for completion in 2000.
Production Facilities: Bellingham, Wash. Crossett, Ark. Palatka, Fla.
Plattsburgh, N.Y.
----------
Georgia-Pacific Tissue L.L.C. Commercial Packaged Products: Full range of
----------------------------------------------------------
tissue products and dispensing systems for quick-service and full-service
restaurants, and elder care, lodging, healthcare, office building and education
facilities. Joint venture is owned 95 percent by Georgia-Pacific Corp. and 5
percent by Chesapeake Corporation.
Production Capacity: 530,000 tons per year of parent roll capacity directed
to commercial tissue, including 155,000 tons from
consumer tissue.
Production Facilities: Bellemont, Ariz. Brattleboro, Vt. Chicago, Ill.
Crossett, Ark. Flagstaff, Ariz. Gary, Ind.
Greenwich, N.Y. LaGrange, Ga. Menasha, Wis.
Neenah, Wis. Palatka, Fla. Toluca, Mexico
----------
Fort James Corporation: Paper towels, napkins, bath and facial tissue,
----------------------
disposable plates and cups, commercial foodservice products and office printing
and copying papers.
North American
Brand Names: Quilted Northern Brawny Vanity Fair
Dixie Mardi Gras Soft `N Gentle
Green Forest So-Dri Preference Ultra
European Brand Names Lotus Colhogar Embo
Tenderly KittenSoft Delica
Production Capacity: 2.1 million tons (North America); 900,000 tons (Europe)
Production Facilities: More than 50 manufacturing facilities in the United
States, Canada and 10 other countries. Assets include
11 of the 12 largest and most efficient tissue machines
in the world. Expertise in recycling, with fiber supply
uniquely balanced between virgin and recycled.
<PAGE>
Fort James Acquisition
Key Messages / Talking Points
Corporate Strategy
Our strategy is to transform Georgia-Pacific by transforming our portfolio of
assets. We will create value by sharpening our focus on higher-margin businesses
that are closer to the customer. G-P's transformation will improve earnings
predictability, strengthen our market position, and drive the increased cash
flow needed to take our long-standing financial strategy to the next level.
Key Messages
[_] This acquisition is well-timed and will combine with additional steps that
are reshaping Georgia-Pacific, a process we began with the separation of
our timber assets in late 1997 and carried forward last year with the
acquisitions of Wisconsin Tissue and Unisource.
[_] Advancing this operating strategy moves us even further in the direction of
the higher, value-added segments of our industry. This acquisition - which
is immediately accretive to Georgia-Pacific Group on a cash flow basis, and
accretive to our earnings beginning in the second full year - means higher
margins, improved earnings predictability and the increased cash flow
needed to continue to pursue our long-standing financial strategy of
returning excess cash to shareholders.
[_] By divesting selected non-strategic businesses, the transformed
Georgia-Pacific will be able to focus on those paper and building products
businesses that are valued-added and fit our strategic direction.
[_] The addition of Fort James creates the world's leading tissue manufacturer.
Tissue is a segment in which Georgia-Pacific has demonstrated both
operational excellence in manufacturing and logistics and outstanding sales
and marketing capabilities. Adding Georgia-Pacific's low-cost manufacturing
capabilities to Fort James' strong consumer brands and nationwide marketing
will result in greater efficiencies, more vigorous competition in the
retail market and broader distribution of commercial products.
[_] With four acquisitions in the last five years, Georgia-Pacific has a proven
track record of successfully integrating acquired businesses and rapidly
achieving synergies.
Talking Points
Acquisition details
-------------------
Georgia-Pacific will acquire all outstanding shares of Fort James in a
transaction valued at approximately $11 billion. Georgia-Pacific will pay $29.60
in cash plus .2644 shares of Georgia-Pacific Group stock for every outstanding
share of Fort James stock. Fort James' board of directors has approved the
transaction and will recommend that its shareholders accept the Georgia-Pacific
offer.
<PAGE>
Combined revenues of the two companies exceeded $24.8 billion last year.
After the merger, Fort James will be integrated with the existing tissue
business of Georgia-Pacific. The combination will greatly increase
Georgia-Pacific's tissue business, making it a leading producer and marketer of
consumer and away-from-home tissue in North America and providing a significant
presence in 11 other countries. Familiar North American consumer name brands
produced by the two companies include Angel Soft, Sparkle, Coronet, Quilted
Northern, Soft 'N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair and Dixie.
In connection with the acquisition of Fort James, Georgia-Pacific is preparing
to divest approximately 250,000 tons of tissue manufacturing capacity for
away-from-home products as well as other selected commodity and non-strategic
businesses that have been identified.
The acquisition is expected to close in the fourth quarter of this year.
Acquisition rationale
---------------------
Georgia-Pacific identified several key strategic rationales for its Fort James
acquisition, including significant business portfolio improvements and direct
synergies as a catalyst for improved future performance. Among them:
[_] Improvement of Georgia-Pacific's business mix. By moving closer to the
---------------------------------------------
customer and increasing the proportion of value-added product manufacturing
and distribution in its overall portfolio of businesses, the acquisition
will advance Georgia-Pacific's strategic direction. It also strengthens the
company's consumer focus through the addition of respected brand names well
known across North American and European markets.
[_] Increase in earnings predictability. The combined company's cash flows will
-----------------------------------
provide a more stable earnings platform and enable it to continue to pursue
its ongoing financial strategy to return excess capital to shareholders.
[_] Building on Georgia-Pacific's proven track record and operational success
--------------------------------------------------------------------------
in the tissue segment over the past decade. Georgia-Pacific's consumer
------------------------------------------
tissue products business has grown by an average of 8 percent every year
since 1993 through operational excellence in manufacturing and logistics
and outstanding sales and marketing execution. Its commercial tissue
business grew significantly last year with a joint venture that
consolidated Georgia-Pacific's business with Chesapeake's Wisconsin Tissue
assets. That integration has proceeded smoothly and is ahead of schedule.
[_] Leveraging Georgia-Pacific's world-class operational capability to
------------------------------------------------------------------
unlock in excess of $500 million in annual pre-tax synergies. Enhanced
------------------------------------------------------------
product and market coverage coupled with reduced expenses and increased
efficiencies and productivity are expected from the acquisition.
2
<PAGE>
[LETTERHEAD OF GEORGIA-PACIFIC]
News from Georgia-Pacific
--------------------------------------------------------------------------------
Release No. C-1590
July 17, 2000
GEORGIA-PACIFIC TO ACQUIRE FORT JAMES, BECOME WORLD'S
-----------------------------------------------------
LARGEST TISSUE MAKER; OTHER KEY PORTFOLIO ACTIONS
-------------------------------------------------
TO TRANSFORM GEORGIA-PACIFIC
----------------------------
ATLANTA - Georgia-Pacific Corp. and Fort James Corp. (NYSE: FJ) announced
today that the boards of directors of both companies have signed a definitive
merger agreement for Georgia-Pacific to acquire all outstanding shares of Fort
James in a transaction valued at approximately $11 billion.
Georgia-Pacific said the announcement continues a series of major
strategic actions aimed at strengthening its position as a high value-added
paper and building products company. Georgia-Pacific Group (NYSE: GP) will be
the world's leading manufacturer of tissue products when the transaction is
completed.
Under terms of its agreement with Fort James, Georgia-Pacific will acquire
all outstanding shares of Fort James for $29.60 per share in cash and 0.2644
shares of Georgia-Pacific Group stock. Based on the Georgia-Pacific Group
closing price of $28.625 on July 14, 2000, the per share consideration totals
$37.17 per Fort James share. The transaction includes the assumption of
approximately $3.5 billion of Fort James net debt.
In connection with the acquisition of Fort James, Georgia-Pacific is
preparing to divest approximately 250,000 tons of tissue manufacturing capacity
for away-from-home products as well as other selected commodity and non-
strategic businesses that have been identified. "The transformed Georgia-Pacific
will be able to focus on those paper and building products businesses that are
valued-added and fit our strategic direction," said A.D. "Pete" Correll,
chairman and chief executive officer of Georgia-Pacific.
"Today's actions and future divestitures are indicative of the major
transformation under way at our company," Correll said. "Our strategy is to
transform Georgia-Pacific by transforming our portfolio of assets. We will
create value by sharpening our focus on higher-margin businesses that are closer
to the customer. Georgia-Pacific's transformation will improve earnings
predictability, strengthen our market position, and drive the increased cash
flow needed to take our long-standing financial strategy to the next level."
-more-
<PAGE>
-2-
"This transaction represents a fine opportunity for our shareholders and
should provide a great platform for Fort James' talented employees," said Miles
L. Marsh, chairman and chief executive officer of Fort James. "With the
enhancement provided by our brands, products and market positions, Georgia-
Pacific becomes an even stronger, more exciting company."
The maximum value that can be received by Fort James shareholders is $40
per share (comprised of $29.60 in cash and $10.40 in Georgia-Pacific Group
stock). Therefore, the 0.2644 shares of Georgia-Pacific Group included in the
offer is subject to downward adjustment in the event its average share price is
greater than $39.33. Georgia-Pacific expects the acquisition to be immediately
accretive to Georgia-Pacific Group on a cash earnings basis (reported earnings
excluding goodwill) and accretive on a reported earnings basis (after goodwill)
beginning in the second full year after the transaction.
After the merger, Fort James will be integrated with the existing tissue
business of Georgia-Pacific. The combination will greatly increase
Georgia-Pacific's tissue business, making it a leading producer and marketer of
consumer and away-from-home tissue in North America and providing a significant
presence in 11 other countries. Familiar North American consumer name brands
produced by the two companies include Angel Soft, Sparkle, Coronet, Quilted
Northern, Soft 'N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair and Dixie.
"Clearly, this transaction will bring stronger competition to the retail
and away-from-home tissue markets," Correll said. "Adding Georgia-Pacific's low-
cost manufacturing capabilities to Fort James' strong consumer brands and
nationwide marketing will result in greater efficiencies, more vigorous
competition in the retail market and broader distribution of commercial
products."
Combined revenues of the two companies exceeded $24.8 billion last year.
"This acquisition moves us rapidly toward higher value-added segments of
our industry," Correll said. "Consistent with all of our prior actions, this
transaction is aimed at providing the increased cash flow needed to continue to
pursue our ongoing financial strategy of returning excess cash to our
shareholders."
Georgia-Pacific identified several key strategic rationales for its Fort
James acquisition, including significant business portfolio improvements and
direct synergies as a catalyst for improved future performance. Among them:
[_] Improvement of Georgia-Pacific's business mix. By moving closer to
---------------------------------------------
the customer and increasing the proportion of value-added product
manufacturing and distribution in its overall portfolio of
businesses, the acquisition will advance Georgia-Pacific's strategic
direction. It also strengthens the company's consumer focus through
the addition of respected brand names well known across North
American and European markets.
<PAGE>
-3-
[_] Increase in earnings predictability. The combined company's cash
-----------------------------------
flows will provide a more stable earnings platform and enable it to
continue to pursue its ongoing financial strategy to return excess
capital to shareholders.
[_] Building on Georgia-Pacific's proven track record and operational
-----------------------------------------------------------------
success in the tissue segment over the past decade. Georgia-Pacific's
--------------------------------------------------
consumer tissue products business has grown by an average of 8
percent every year since 1993 through operational excellence in
manufacturing and logistics and outstanding sales and marketing
execution. Its commercial tissue business grew significantly last
year with a joint venture that consolidated Georgia-Pacific's
business with Chesapeake's Wisconsin Tissue assets. That integration
has proceeded smoothly and is ahead of schedule.
[_] Leveraging Georgia-Pacific's world-class operational capability to
------------------------------------------------------------------
unlock in excess of $500 million in annual pre-tax synergies.
------------------------------------------------------------
Enhanced product and market coverage coupled with reduced expenses
and increased efficiencies and productivity are expected from the
acquisition.
"The acquisition of Fort James will combine with additional steps that are
reshaping Georgia-Pacific, a process we began in late 1997 with the separation
of our timber assets and carried forward last year with the acquisitions of
Wisconsin Tissue and Unisource," Correll said. "Across four acquisitions in the
last five years, Georgia-Pacific has an outstanding track record of successfully
integrating acquired businesses and achieving synergies rapidly. We are looking
forward to bringing these capabilities to this transformation for the benefit of
our shareholders."
Under the terms of the agreement, Georgia-Pacific will begin an exchange
offer for the Fort James shares upon the effectiveness of a registration
statement to be filed with the Securities and Exchange Commission. The company
expects to close the transaction, subject to regulatory approvals, in the fourth
quarter of this year. Required financing will be provided by a syndicate of
lending institutions led by Banc of America Securities, Merrill Lynch and Morgan
Stanley.
Georgia-Pacific's present 12-member board of directors will be
supplemented with three new directors to be designated from Fort James' existing
board of directors. Georgia-Pacific said it does not anticipate any regulatory
obstacles that would prevent completion of the transaction. Fort James' board of
directors has approved the transaction and will recommend that its shareholders
accept the Georgia-Pacific offer.
Merrill Lynch & Co. and Banc of America Securities are acting as financial
advisors to Georgia-Pacific. Shearman & Sterling is providing outside legal
counsel. Morgan Stanley is acting as financial advisor to Fort James, and
Wachtell, Lipton, Rosen & Katz is its outside counsel.
-more-
<PAGE>
-4-
--------------------------------------------------------------------------------
NOTE: Georgia-Pacific will conduct a telephone conference call at 11 a.m.
----
a.m. Eastern today (Monday, July 17) for financial analysts to review this
morning's announcement of the Georgia-Pacific-Fort James merger agreement. The
conference call will feature A.D. "Pete" Correll, chairman and chief executive
officer of Georgia-Pacific; and include Danny Huff, executive vice president -
finance and chief financial officer for Georgia-Pacific; and Lee Thomas,
executive vice president - paper and chemicals for Georgia-Pacific.
To participate in this call, dial (888) 467-8159 (domestic United States)
or (630) 395-0437 (international). Password to participate is "gapac." Replay of
the conference call will be available beginning at 2:30 p.m. by dialing (888)
568-0691 (domestic United States) or (402) 998-1464 (international). Replay will
also be available on the company website by following the links at www.gp.com.
-----------
--------------------------------------------------------------------------------
Headquartered at Atlanta, Georgia-Pacific is one of the world's leading
manufacturers and distributors of paper and building products. Its familiar
consumer brands include Angel Soft, Sparkle, Coronet and MD tissue products and
Pacific Garden antibacterial hand soap. The company also sells tissue products
for the away-from-home market. Georgia-Pacific's building products distribution
segment has long been among the nation's leading wholesale suppliers of building
products to professional builders and contractors, hardware stores and large do-
it-yourself warehouse retailers. In addition, Georgia-Pacific is the nation's
largest producer of structural wood panels and second largest producer of lumber
and gypsum wallboard. The company employs approximately 55,000 people at more
than 500 locations in North America.
Fort James is a leading international consumer products company, serving
consumers both at home and away-from-home with bathroom and facial tissue, paper
towels, napkins, cups, plates, cutlery and food wrap products. The company's
popular brands include Quilted Northern, Soft 'N Gentle, Brawny, Mardi Gras, So-
Dri, Vanity Fair, and Dixie in North America, and Lotus, Okay, Embo, Colhogar,
Tenderly, KittenSoft and Delica in Europe. With 1999 sales of $6.8 billion, the
company has approximately 25,000 employees and 50 manufacturing facilities
principally located in the U.S., Canada and Europe.
--------------------------------------------------------------------------------
Certain statements contained in this release, including, without limitation, the
existence and achievement of synergies of the combined businesses of
Georgia-Pacific and Fort James, plans for future transformation and
divestitures, increases in earnings predictability and future financial
performance 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 global and
domestic economic conditions on the demand for tissue products; realization of
cost savings and synergies in integrating the two businesses; the existence of
financially capable buyers for businesses to be divested, changes in the
production of and demand for tissue and other products manufactured by
Georgia-Pacific, and other factors listed in Securities and Exchange Commission
filings of Georgia-Pacific and Fort James.
--------------------------------------------------------------------------------
<PAGE>
Media
Contacts: Ken Haldin / Georgia-Pacific
(404) 652-6098
Greg Guest / Georgia-Pacific
(404) 652-4739
Mark Lindley / Fort James
(847) 317-5280
Analyst
Contacts: Richard Good / Georgia-Pacific
(404) 652-4720
Celeste Gunter / Fort James
(847) 317-5355
<PAGE>
"SECOND QUARTER UPDATE" BROADCAST - Draft 6 - 07/17/00 10 am
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1) Program Begins - Video Clip
--------------------------------------------------------------------------------
(Program opens with five-minute CNBC video clip of announcement)
----------------------------------------------------------------
(Audience applause)
-------------------
--------------------------------------------------------------------------------
2) Pete Begins
--------------------------------------------------------------------------------
(Pete standing on steps; facing toward stage camera; audience clapping behind
-----------------------------------------------------------------------------
him)
----
. Welcome to the second quarter broadcast. Thank you for tuning in.
. I know you were expecting to see this broadcast on Wednesday and I
appreciate that you changed your schedule to be here today. When we
realized we were going to be able to make a big announcement today, lots of
folks went to work so we could release our earnings a couple of days early.
I didn't want to wait until Wednesday to talk face-to-face with you, so I
decided we'd go ahead and have this broadcast today.
. So, as you know, this is a very big day for Georgia-Pacific.
. This morning, G-P and Fort James announced a merger agreement in which G-P
will acquire Fort James. The transaction will involve acquiring all
outstanding shares of Fort James through cash and G-P stock for a total of
about $11 billion.
. This is simply an outstanding opportunity for Georgia-Pacific, and we are
very excited about it.
. I want to spend some time telling you about Fort James, why we think it is
such a tremendous addition to G-P and why now was the right time for this
acquisition.
-1-
<PAGE>
. Today, of course, we also announced our quarterly earnings and I want to
spend some time talking about the quarter and about the rest of the year.
After all, it's important that I stay focused on transforming G-P into the
best possible company, but it's just as important that all of you stay
focused on running each business as well as we possibly can. In fact, we'll
end the program today by looking at the great things you've accomplished in
this quarter.
. First, however, I want to step back for a minute to talk about our
corporate strategy. I want to talk about the transformation which has been
under way for some time and which took a major step forward today.
--------------------------------------------------------------------------------
3) Pete - Strategic overview
--------------------------------------------------------------------------------
. Let's go to the first slide.
(ON SCREEN: Slide 1)
--------------------
. As you know, Georgia-Pacific once focused on competing as a leader in
operational excellence - focusing on the commodity area of the value chain.
We also owned and operated businesses along the entire value chain, from
timber and raw materials to finished products and distribution.
. Now, over the last several years we have focused on transforming G-P. We
have leveraged our operational excellence and moved closer to the customer
by providing increasingly differentiated, customer-focused products and
services. Along the way, we have moved away from the less-value-adding
segments of the forest products business and no longer focus on the entire
value chain.
. The first big step in that transformation came in 1997 when we separated
our timber assets into the Timber Company. While we believe The Timber
Group's value has not been fully reflected in the stock price, we do
believe the separation has been successful in many other measures.
-2-
<PAGE>
. G-P Group has new sources of timber and is doing a better job at
procuring wood at the lowest possible cost;
. We've uncovered the true operating performance of manufacturing;
. And TGP has been able to opportunistically time the sale of
timberlands for the highest possible value.
. So that part of the transformation strategy has worked.
. We went further along the transformation strategy last year with the
acquisition of Unisource and Wisconsin Tissue. In both cases, we shifted
our portfolio of businesses in the direction of the value-added segment of
the industry.
. Both of those acquisitions also have proven very successful. We not only
integrated the operations, teams and products into G-P, but we did so
quickly and have achieved the synergies we expected and more.
. Even more importantly, they have shown the advantages of our transformation
work by playing key roles in recent strategic moves. For example, just two
weeks ago, G-P and Xerox announced a deal in which we will sell
Xerox-branded papers, perhaps some of the best known papers in the
industry. We simply could not have done that deal without Unisource.
. So we have moved Georgia-Pacific along this transformation strategy and
today we made a major leap on that path.
. Let's talk for a bit about Fort James and that big leap.
--------------------------------------------------------------------------------
4) Pete - Fort James Overview
--------------------------------------------------------------------------------
(ON SCREEN: Slide 2)
-------------------
. Fort James is a leading tissue manufacturer. It is number one in the U.S.
And they are number three in Europe.
-3-
<PAGE>
. Fort James has annual sales of about $7 billion and generates cash flow of
about $1.4 billion. More than half of those revenues come from their North
American tissue business, another quarter from the European tissue business
and the rest in their Dixie and papers and fiber businesses.
. Fort James adds premium tissue and towel brands to complement our Angel
Soft and Sparkle brands. Many of our customers know us ONLY through our
brand names, and you should know Fort James through theirs: Brawny, Quilted
Northern, Dixie, as in Dixie cups, and lots more.
. Tissue is a business in which Georgia-Pacific has demonstrated both
operational excellence in manufacturing and logistics and outstanding sales
and marketing capabilities. Adding G-P's low-cost manufacturing
capabilities to Fort James' strong consumer brands and nationwide marketing
will result in a real home run. We'll develop greater efficiencies, more
vigorous competition in the retail market and broader distribution of
commercial products.
. Adding Fort James also gives us additional technical and R&D capabilities
in the tissue business. That will prove extremely helpful as we work to
grow the business and develop new, improved products.
. And, finally, Fort James has a significant international business and that
opens up overseas growth opportunities. Of course, I've always said that we
saw few, if any, international business strategies that looked very
appealing to us. However, with Fort James, we get an existing company that
has operations and market around the world. From that base, we'll be able
to optimize those businesses to make sure they deliver real value to our
company.
--------------------------------------------------------------------------------
5) Pete - Fort James Acquisition Rationale
--------------------------------------------------------------------------------
(ON SCREEN: Slide 3)
--------------------
. So, why did we decide to acquire Fort James.
-4-
<PAGE>
. The primary genesis of the decision was, of course, to further pursue the
transformation of Georgia-Pacific to move to higher value-added segments of
our industry.
. More specifically, as we looked at that strategic analysis, along with
recent stock price performance of Fort James AND our recent success with
the Wisconsin Tissue integration, we knew this was an excellent time to
initiate the transaction.
. Subsequent discussions with them resulted in an attractive price at a good
time.
. This acquisition will be accretive in the first year on a cash basis and in
year two for our earnings.
. We expect to derive significant synergies from the combination and
ultimately save about $500 million a year by 2002.
. And, most importantly, we have the best management team and employees in
the tissue business now running the world's largest tissue company.
--------------------------------------------------------------------------------
6) Pete - Divestitures
--------------------------------------------------------------------------------
. Now, as I'm sure many of you noticed in our official announcement this
morning, our transformation strategy also involves two challenges.
. First, we know there are overlapping products and overlapping markets
between our tissue businesses. Thus, we have already decided that we must
divest about 250,000 tons of away-from-home tissue capacity. That also
should go a long way to alleviating any concerns about our tissue business
now being too large.
. I know that causes tremendous concern among employees. I hope you
understand that we simply do not have any final decisions made about those
-5-
<PAGE>
divestitures and can't say anything more about them until we do. I know
Mike Burandt and Lee Thomas will do their best to let any affected
employees know as soon as possible and will continue to be concerned about
how this impacts employees.
. Our transformation strategy also will include divesting other assets that
are not core to our strategy of moving into higher value-added products.
Again, we have not made any final decisions and we promise to let you know
more as soon as we do.
--------------------------------------------------------------------------------
7) Pete - Management Changes
--------------------------------------------------------------------------------
. I'd also like to mention a few key management changes:
. Effective immediately, Lee Thomas will focus 100 percent of his time on the
merger. Mike Burandt and Bob Millikan will continue to report to Lee.
. Also effective immediately, Clint Kennedy will assume responsibility for
the communication papers business and will begin an orderly transition to
oversee Unisource management which should be complete by the time we close
Fort James. Clint will maintain his responsibility for the pulp business.
. Steve Macadam will be promoted to executive vice president at the next
Board meeting. In addition to his current responsibilities for
containerboard and packaging, Steve will add responsibility for corporate
purchasing.
. Jim Kelley also will be promoted to executive vice president at the next
Board meeting. In addition, he will assume management responsibility for
the Chemical Division.
. And, finally, Chuck Williams, who currently reports to me, now will report
to Danny Huff.
--------------------------------------------------------------------------------
8) Pete - Second Quarter Overview
--------------------------------------------------------------------------------
-6-
<PAGE>
. Let's turn now to our second quarter financial performance. As most of you
know it was a good quarter, although frankly not as good as we once thought
it would be. Many of our businesses scaled back production to keep
inventories in line with demand. Prices for pulp and paper continued to
contribute to positive results from those businesses. Building products
results were good, but can't compare to last year that was simply
blistering and unsustainable.
. I know our operating performance comes from hard work in every corner of
this company. From all teams and from all employees doing their part. Thank
you very much for that effort.
. As I said before, it is important for me to stay focused on the
transactions that can help us transform our company and move us along our
strategic focus. It's just as important, however, that all of you stay
focused on running our businesses and delivering these results.
--------------------------------------------------------------------------------
9) Pete - Second Quarter: Georgia-Pacific Group
--------------------------------------------------------------------------------
. Let's go to the numbers and the first slide:
SECOND QUARTER (graphics on screen)
. Second quarter net income for G-P Group was $206 million or $1.20 per share
compared to 1999 second quarter net income of $212 million or $1.20 per
share.
. As we anticipated, improved conditions in our pulp and paper businesses
during the quarter offset weaker demand and prices for most of our building
products.
. Sales for the quarter were $5.5 billion compared to $3.8 billion in the
same quarter a year ago. Of course, this quarter reflects the addition of
Unisource
-7-
<PAGE>
as well as the integration of the former Wisconsin Tissue into Georgia-
Pacific Tissue.
. We're not going to go through all of the segment results today, but just
---
let me say that operating profits increased more than four-fold in the
pulp and paper segment and by 86 percent in the containerboard and
packaging segment when compared with last year's second quarter. Even
though second quarter volumes in many of our paper businesses were flat or
slightly lower than first quarter, our careful management of inventories
through mill downtime and slowbacks helped us achieve an excellent
quarter.
. On the building products side, compared with 1999's record-breaking second
quarter, results were impacted by slower housing activity and substantial
downtime because of oversupplied markets.
. Prices for plywood and oriented strand board were down 15 percent and 12
percent, respectively, and our lumber business posted a loss for the
quarter as its prices and volumes declined from a year ago. Gypsum prices
were essentially the same as a year ago, but shipments of gypsum wallboard
were well off the blistering pace set during second quarter 1999.
. The building products distribution segment remained profitable during the
quarter, despite notably weaker market conditions.
--------------------------------------------------------------------------------
10) Pete - Second Quarter: The Timber Company
--------------------------------------------------------------------------------
. Next, let's quickly review The Timber Company's results.
SECOND QUARTER (graphics on screen)
. The Timber Company's 2000 second quarter net income was $34 million or 42
cents per share. That compares with 1999 second quarter net income of $99
million or $1.16 per share. That quarter, however, included a $50 million
after-tax sale of company timberlands in Maine and New Brunswick.
-8-
<PAGE>
. Sales for the quarter were $102 million compared to $138 million a year
ago.
. During the second quarter, The Timber Company returned $77 million to
shareholders through share repurchases ($57 million) and dividends ($20
million).
. Overall, The Timber Company continues to benefit from its strategic
emphasis on the timber business exclusively and has been able to
consistently perform well in a variety of market conditions.
--------------------------------------------------------------------------------
11) Pete - Moving Forward: 2000 Outlook
--------------------------------------------------------------------------------
. Again I want to thank each and every one of you who had a part in our
achievements in the first half of this year.
. We had a good quarter. We're making progress on a number of fronts, and we
continue to outperform others. Now our focus shifts to the rest of the
year.
. We continue to believe that 2000 will be a good year for Georgia-Pacific.
The outlook for our pulp and paper businesses remains very good, with
demand continuing to improve and minimal new capacity present or planned in
the marketplace.
. We also expect building products prices to stay under pressure as interest
rates remain above year-ago levels and housing starts continue to
moderate.
. As we move forward in 2000, strategically managing our inventories to meet
demand through the use of downtime and mill slowbacks, and keeping our
operating costs as low as possible, will continue to be a way of life
within Georgia-Pacific. We remain optimistic that we will turn in a solid
financial performance during the remainder of the year.
-9-
<PAGE>
. All of this means that it is even more important that we don't let down in
our own performance. We must continue to focus on the things that we have
proven we do well. Keep our eye on safety, continue to drive costs down,
sell the right products to the right customers, service their needs and
manufacture products as efficiently as possible at a rate to match demand.
. We believe those things are key to winning in any market condition.
--------------------------------------------------------------------------------
12) Pete - Question & Answer Segment - OPTIONAL
--------------------------------------------------------------------------------
. In the few minutes we have left, I want to open the phone lines for
questions. The number to call is (800) 947-8549.
--------------
. Remember, I'll try to answer your questions but there is limited
information that I can provide now.
--------------------------------------------------------------------------------
13) Pete - Wrap Up on Last Question and Introduce Milestones
--------------------------------------------------------------------------------
. OK, well if that's all the questions we have, let's just sign off.
. This time, I want to end the broadcast by showing all of the great
milestones you accomplished this quarter. I'm not going to read over them,
but let you take time to read these and recognize each others'
achievements.
. Let me just thank everyone for another very good quarter in safety and for
all of these other great accomplishments.
. Rejoice in this great day for Georgia-Pacific and thank you again for
coming and for all you do for Georgia-Pacific.
. Let's start the milestones.
[SHOW CLOSES WITH MILESTONES; NEW TAGLINE ON SCREEN]
-10-
<PAGE>
1 Company Overview
2 FORT JAMES
3 2000E Statistics*
4 2000E Revenue Breakdown
[GRAPH APPEARS HERE]
($ in Billions)
Sales $ 7.1
EBITDA $ 1.4
% Margin 20.0%
EBIT $ 0.9
% Margin 13.2%
Strengths
. Leading brand names
. Strong market position
. Low cost producer
. Innovative products
<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 an attractive price at a reasonable time
. EPS accretive across the cycle
. Synergies reach full run rate of over $500 million per annum in 2002
. Best management running the new business
<PAGE>
Move forward in the value chain
FROM... competing as a leader in operational excellence focusing on the
commodity area of the value chain
Raw Intermediate Value Add /
Timber Distribution Materials Products Converting
Domtar
TO... leveraging operational excellence and moving closer to the customer by
providing increasingly differentiated, customer-focused products and
services
<TABLE>
<CAPTION>
Raw Intermediate Value Add /
Timber Distribution Materials Products Converting
<S> <C> <C> <C>
Timber Letter Stock Potential Future Divestitures Unisource
Wisconsin Tissue
Fort James
</TABLE>
Migration Path
. No Presence . Some Presence . Major Focus
