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Tu'cntx-fifth Annual Report 1951
PLAINTIF} S EXHIBIT GP-930
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Georgia-Pacific
PLYWOOD COMPANY
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home office: Southern Finance Building, Augusta, Ga. advertising department: 300 Par*Awr- New Kork,N. Y.
Divisional Headquarters
eastern, 102 Marsh Street, Port Newark, N. J. >tusvresrEsoi,332SoulhMlchiganAcenue,Chicago4.lU. southern, Southern Finance Building, Augusta, Ga. western. 600 North Capitol Way, Olympia, Wash.
Contents
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PACE 5 Highlights of 1951 7 The Year in Review 8 Acquisition of the Johnsoh Corporation 8 Financial 10 Timber 12 Prices 17 Industry Growth 17 Production 18 Labor Relations 18 Research 19 Sales and Distribution
21 Advertising 21 Conclusion 28 Products. Sales Offices, Warehouses
and Mills
TABLES
4 Statistical Summary 14-15 Comparative Statistics and Ratios 22-27 Audited Statements and Certificate
CHARTS 14-15 Saw Timber on Commercial Forest
Land and Proportionate Interest of Owner
Douglas Fir Plvwood Production and G-P Price
Changes in Hourly Rates of Pay in Company Northwest Plywood'Plants
Sales Growth
Map: Offices. Warehouses and Plants
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1950
PER COMMON SHARE OUISTAKDIKG
756*168 SHARES
958,193,011 9211,656
$ 76.94 12.18
4,805,000 532,611 65251
3,808,794 472,730
3,336,064 9208,771 10251297
116,048,954
625 .70 .08
5.03 m
4.41 1L91 13.28
1,354,107 3,308,198 US71.745 10,114;844
2,702
2,122
335
1950
$70.052260 12200.639 6.184,159 6216,480 532,611 5,783269 1.698252 4.085,317
PER COMMON SIMMS ON
1,132,368 shares
$6128 11.04 5.46 5.5.8 .43 5.10 120 3.00
On December 20 we acquired the C. D. Jolmson Lumber Corporation through the purchase of its Com mon Stock, and increased our supply of timber by about 900 million feet
We increased the Common Stock outstanding bv 177 through the sale of 126,000 additional shares, and increased the book value of all Common Stack by 95 per share for the year.' '
Sales were increased to a new high.
We further strengthened our sales and distributing system through the addition of Company warehouses in Pittsburgh and four other key loca tions, and by increasing the capac ity of our distribution warehouse at Port Newark, New Jersey.
We increased the efficiency of our plywood plants, and raised the ca pacity of the Springfield, Oregon, plant 257.
We retired the minority interest in ottr West Const subsidiary, Wash ington Veneer Corporation, and now own 1007.
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The Year in Rroinv
1951 Uisitlls
Sales si ere sfii.7;>9.-5l I lor the war eiuled IVeeiulier-'lt. 1951 as compared with S5S.193.011 in I Moil. \et pmlits alter taws for the sear 1951 nmutinied to So.177.22-1 as compand nilli -S->..S71.01.1 the pm ions sear. In IJoceml>cr (a*on'in-l`acific ac quired (L I). Johnson l.iiinhcr ('oqxiratiim. a lanje timber oss him; coticvrn of the North-
si esl. l-'or tin* fiscal sear ended Nosi-mher m 1951 Johnson sail's wen1 SI3.5ll2.7Stt and net earniii"s alter taxes si.;] It).14-1. Unis -Si 12.077 nl |oIiilsiiiis i-ariinius are included in tin- (leorija-l'aeilie 1951 profits reported altos e.
\fter |ta\ iiieiil of Preferred disidemls totaling *01.723. (anninoii disidemls total ing SI. IS 1.557. or SI .511 per 'lane sivrc |>aid - hmr <|Marfcrl\ dis idends ol 37V' each.
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Tin1 (.ihulaliuns mi page I will show tlne.iiniirgs |ht ('<1111111011 sliarc of (.'corgi,iI'.icifie .illjustitI to gii < clFcvl In till' ac quisition of tlir Johnson Corporation and llio ri-l.itiil financin'.;.
.Irijiiiufii'ii oJ l/ti .Ivltumi (jirfuiff/liou
1H Dceemlior.'JI. ii)5l c luul acquired 5)77 of tin1 outstanding capital stock of C. 0. JoIiiisoii I .umber Coqioration. Since l)cci'iiiIxt the C'ompam lias aciniircd 1007 of ihc stock at a total cost ol appmximatelv SI6.SOO.OOO.
The major advantage of this purchase to Cuurgia-Pacific was tlio acquisition of con trol of the Johnson Corporations large timlicr holdings in northwest Oregon, esti mated at appruximatch l)00,(XXI.0(K) feet with old growth Douglas ITr predominat ing. 'Iln's timber is considered to he one of the fine tracts of old growth fir in North \inorica. estimated In independent tiiulx-r
engnieers to ha\r a vonscri atnc lalne of S15.0(X).IK1U. This compares with the cost to (I'liirgia-I'.ieifteof .ippwxiniatelv-SVfiOO.tXXf after diiloetiiig the other net assets secured in the acquisition, t liurgia-Pacific aLso aipiired in the ileal one of the largest limiher mills in Oregon, complete logging, ship ping and harbor facilities and the earning power of (.'. D. Johnson Lumber (Jorporation which had aivragc net profits before tuxes, over tile past six sears, amounting to appnxiiiiatch S2.730.(XXl per war.
Financial
TheCompain pruiided tin-initial finaueing ol the Johnson purchase lie Ixirrowing SI2.01X1.000 on its 14-iiioutli promissory note from Bank of America and provided the S-1.2tX).00() halanecof the purchase price from Company 1 mills and through the private sale of J20.0(K) shares of Common slock. In March 19-52 this trjiqiorary loan was ix'finaiiccd on a peniianciil basis, in
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|i.irf h\ llit- stlc <il additional (.'timmiiii spick .ititl Ion*; lerm liorrowmes. A wimin.trv of the sources ul (lie jicnnanMil funds' lor (In- acquisition of (he fnlmvm (.`nrpitraI ion is .is follows:
Sale priv.itclv ul 120.000 sliarcs
ol (aimiiinn stock in Nmrinher
19-31 .it -S2(l per share
<i 2.31.(1(10
Sale puhlich oi 2.VUXK1 shares ul (aunuioii stock i'l March 10-32 al S21 per share. less unilerscrilini' commissions
J.SS2AIK)
15-vonr lerm loan frinn Hie Pmdeolinl Insurance (annpaus ol \mrricu
4.000.000
Ikccss cash funds from the
Johnson Coqiomtinn
4.000,000
(ienruia-Pacific cash
1.307.300
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Plyvcod taodwKhes ate processed with heo/ and pressure in /urge hydraulic presses.
Al the conclusion of (lie fiuuncina the
imill>cr of Common shares niilstitmlin* had
inereiised from Tofi.-'jfiS to I. l>2.-1fiS and our
working eapilal posilioii was ample (o pniii side lor onr business needs. (iisilio efhvt
!o (!iis finaneinu on a pro lornia basis. as
ol Di-cciiiIxt ;I. 1M.3I. onr current assets
were S21.S'5tl.7SS. iuchldiii!> cash and (an eniiueul llnuds of SlJ. j-'yS. 1 ST against total current lialiilitics of Slk7.3T.S2I. leawiiu net worLine s-apilitl of SI2,072.964
a,ofrc nnorcgiuif'Hi
*im. ..'tnrt-d .v
/`net** during
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The details of the finauciii" are iven in
the Prosjteelus. dated March 5. 1932. issued
in ninnection with the piililic offprint' ol
the ( aiuinion slock, u liieh is atailahle upon
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O/hn Corfmv/r Dinlopi/trnls
K:irly in the vear. the $2,065,700 minority interest in our siihsidiarv. Washington Veneer Corporation. was retired through the redisnption of all of the outstanding shares of its 5'< Gimelatico Preferred stock.
In July 1951 the Compain disposed <( its smallest lunilier plant, at Walterboro, S. C.. to the Manager, hut retainrcl a sales contract to continue to handle the output of the mill.
Timber
In the conduct of its operations, the Cornpain s policy for many sears has been to obtain about 2/-'3 of its timber require ments thrnunli purchases in the open mar ket ami (lm>n"h ciiltiu;' contracts, and to proside the remaiiiino I o from our owned timlier resers es. Xn change is eunteuiplaled in this General jxiliev so loin; as timlier is availahle at reavinahle prices. In 1951. with
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mir vnlimii' reaching a in-vv In's'll, it v;is de ilj forestetl areas of western Washington
ckled that it was desirable to li.-.v e larger timber re-senes in (he event that substan
and Oregon, in which substantial timber stands iire periodically offered for publie
tial purchases of peeler logs eoulcl tint lie sale, the Company docs not anticipate anv I advantageously made. Accnrdinglv. tlie material shortage of tinilier supplies for its
( uimpanv negotiated tlie purchase of C. D. plwvnod and lumber u|x-mtions in tile
Johnson Lumber Corporation mentioned .Northwest in the foreseeable future. How
above.
ever. in view of the increasing demmids
Our limlxT reserves in the Northwest for timlier. the Company is unalile to fore
including the Johnson acquisition. now ap cast the extent to which it will lx- possible
proximate 1.200 million feel. In addition, to purchase the hulk of its log requirements
the Company has several purchase con from others tit pursuance of its established
tracts with others under which [teeler logs are made available to tile Company. One
policy, and it is tlicrefnrc impracticable to estimate the extent to whieft it may lie found
of the most important nf these is with the necessary or advantageous to draw on its
llootli-Kellv Lumlier (jnupany wliicii owns own reserves.
a 25'< interest in our Springfield. Oregon,
The timber requirements of our Soutliern
mill.
mills have been supplied to the extent of
In 1951. approximately 7ft< of the timber approximately 2 3 from 6wncd or leased
requirements of onr Western plywood mills lands, or under cutting contracts, and to
wits purchiLsed from others. On the liasis the extent of approximately I 3 through log
of flic presentfv owned and controlled re purchases frotii others. The Company fore
serves. and in \ ievv of tlie fact that all of sees no diirieullv in adhering to approxi
these operations an* eomliieted in tile licav- mately these ratios in procuring the timber
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WhofsiaJe diifnbufion wofeboujo at PiHiburgh, Pennsylvania, one ol nineteen strategically located ditlnbuhon poinli.
Company products have always been distributed worldwide, rbii ihipmenl el lumber being loaded ot Chadesion. Sot/fh Carolina, is bound tor Jamaica.
requirements of these mills in the future, The Company estimates that the amount of timber presently available to these milk from lands owned or leased or with respect to which the Company has cutting rights, aggregates approximately 110 million board feet, with options on some 35 million feet additional.
hires
During the sear the defense program laid an important inltuciicc upon production and prices in the industry. In the summer the Government issued instructions for the manufacturers of Douglas Fir plywood to set aside first 20`i and then 307 of their pro duction for Government use. Military buy ing for the fiscal sear ending June 30.1952 ivus cxpcctrd to amount to 200 million square icct svith an additional 500 million square Icct to come indirectly into the de fense program. Due to delays in Govern ment procurement, however. less than
20 million feet for the military had been taken by the end of December 1951.
The first effect of the set-aside orders svas to stimulate production on the part of manufacturers and to advance buying on the part of customers, many of whom may hasp feared Covcmmcnt demands svould create a shortage. When Government or ders did not materialize to the indicated extent forward Inning on the part of cus tomers ceased arid a tendency to reduce in ventories dcsch)|)fd. This resulted in price reductions during the last quarter from an index price of 395 to a low of $75 at xvhich lesel there wax m> profit. This seas accom panied by widespread production cuts throughout the iwlnstrv. During the month of DecemlxT, however, civilian and com mercial consumption which had not materfcilK slackened at any time had so reduced jobber inventories throughout the country tliat a higher rati' of production soon prevaik'd. In January our index price was re used upward to $32.50 and in February
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Product research and quality control
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Georgia-Pacific
offices. warehouses
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Saw Timber mi Commercial Forest land aod Proportionate Interest el Owner
NORTHWEST
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M GOVUNMEHT J3 FABKESS sa INOUSTKMl ImhI OlhersJ
OFFICES
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to $88. Reflecting buyers' requirements for plywood, orders during trite first quarter of this year have been in excess of produc tion. The range of prices and production rates is indicated by the chart on page 14.
Industry Grmvth
Approximately 7/8 of Ceorgia-Facifics plywood production is Douglas Fir, and we continue to support the Douglas Fir Ply wood Association in its program designed to stimulate increased use of plywood for all purposes. During the past year, more and more manufacturers turned to the use of plywood for the first time. Much of the industry's growth is due to the fact that industrialists of all types who first use ply wood continue to use it because of the, su perior quality it gives to their own product and because of its lower cost. Plywood cun often be applied in place of same other
material at a reduced labor cost. The sav ing. plus its great strength, lightness of weight and ease of working; tend to bring any new user back for repeated and regu lar purchases.
Reflecting increased uses; as well as a continued high level of business activity, the demand for plywood last year again increased over the preceding year. Produc tion of Douglas Fir plvwood In 1951 totaled 2.620.000. 000 square feet compared to 2.500.000. 000 in 1950.
Production
Production at our Western plywood mills is now again on a twenty-four hour day. Are-day week basis. Some additions were made to production facilities during 1951. For example, by Improving our manufac turing processes and through the addition of equipment, the capacity of our Spring-
Georgia-Pacific's wholesale distribution warehouse at Part Newark, New Jersey, one of ihe Company t oufJefs for serving major industries and thousands of retail deoters and through fhem hundreds of smatl industrbl users.
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field, Oregon, plywood plant was increased by 25?. Acme Door Corporation, a wholly owned subsidiary, with 128,000 square
try while plywood prices are substantially below those in effect most of last year.
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feet of manufacturing spice, has produced more than 100,000 doors in a given month.
Research and Product Develop-rtienl
All of the Company's southern plants oper Industrial uses of CPX, our popular plastic
| ated normally throughout the year.
faced plywood, have been expanded
Our combined mills now represent on through research and development.
our books an investment of $7,288,399.
A new low-cost decorative wall paneling
They have an appraised depreciated value, was developed and is being introduced to
Iwwever, in excess of $18,000,000, a figure the market under the trade name Wedge-
more nearly in line with their actual pro* Wood. Early results lead us to believe this
ductive capacity.
Labor Relations
Labor relations were good and there were
product has great potential. A new line of interior and exterior Decorator doors is now being offered to the market as The Modem Series, and a radical new style of low-cost door is undergoing pm-marketing tests.
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no work stoppages during the year. Present
In our modem laboratory at Olympia,
labor contracts of our Western operations our research staff runs continuous studies
are up for renewal in May 1952. Current in connection with quality control and ex
developments as to wages in the steel indus try may prove to l>e a disturbing influence
plores methods for more economical pro duction of plywood of all types. They also
in our plants wlicre our minimum rates are already among the highest in all indus
develop and test new products to accom plish maximum utilization of raw materials.
field talesmen ate given latest product information and sales poKcies are Oiscussed of regular meetings, such as this one held at Princeton. New Jersey.
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Billy Mitchell Village of Kelly Field. Texas. Defense housing such os this is an important market far the Company s Fir and Hardwood Plywoods
GPX plastic faced Plywood was selected at the cabin lining for this new non-siniabte cruiser.
Concrete forms of GPX speed the construction of United States Steel Corporation's new foidets Works.
Sales ami Distribution
Sales are directed on a decentralized basis from four geographically distributed divi sional headquarters. Port Newark. New Jersey is headquarters for the Eastern Divi sion: Chicago. Illinois for the Midwestern Division: Augusta. Georgia for the South ern Division: and Olnupia. Washington for the Western Division. Export Depart ments are maintained at Olympia. Wash ington for Western products and at Au gusta, Georgia for Southern products. Domestic sales of carload lots are iiiadc and shipped direet to tlu- purchaser under the direction nf the salesmen in whose divi i sional territory the customer is located. Smaller quantities are sold front our own warehouses or through selected jobbers.
The map in the tenter of this Irtxrk shows what parts of the countrv are served In
f'cfufO and c/itpJoy n'Onuiacfuien 'ovp iotind icugn CPX on npOfiant ntftfiifint
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Tkp .-mooitant Mtdveil market it setv&d tom the atYtruucd itocks of fhe voinpony i Chicago, fllmais, *yfiotesole dntribuhon *--orohovic.
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our own warehouses. The other areas are served mainly through jobbers, jobbers are selected according to their inclination and ability to carry a full line of our products. Owing to inadequate jobber representation in some territories, we increased our Com* pany-operated warehouses last year and now cany stocks of our products in nine* teen Company-operated locations.
Our salesmen meet periodically in each Division for supervised discussion groups. These sessions are for the dual purpose of training men in improved sales methods and of exchanging knowledge of specific requirements of our customers which the men have gained from their contacts in the field. One result of these sales meetings has been to equip our sales personnel to antici pate and more effectively fulfill the require ments of the industrialists, dealers and job bers who are our principal customers.
The jobber and dealer are important fac tors in our sales program. Much of our pro motional material is planned to aid them in their contacts with the ultimate user of our products. Our sales material, like our ad vertising, helps these independent business men to increase their sales of our products and strengthen the relationships with their customers through improved service.
Advertising
Specialized campaigns are directed to industrial management and other volume users through selected trade journals and other publications.
Literature, displays and point-of-sale helps, designed to help retail dealers and jobbers sell Georgia-Pacific products to the ultimate consumer are an important ad junct to our overall sales effort
During the year we built offices at Olym pia, Washington (our Western headquar ters) and at Fort Newark, New Jersey (East ern headquarters), using GPX and other Company products. At these key locations our sales people use there buildings as ef fective testimonials of product quality and usefulness.
Conclusion
The years work which I have attempted to summarize in this report is a result of the cooperative effort of approximately 9500 people of the Georgia-Pacific team. It was one of the best years in our history -- for the employees and for the stockholders. I can not close this report without extending my sincere thanks to each one far the achieve ment.
Respectfully submitted,
Hie Company's sales efforts are supported by vigorous advertising and sales promo tional material. Direct mail is extensively used by the individual warehouses in addi tion to space advertising in dealer, builder and contractor magazines.
0. R. Cheatham President
March 31,1952
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Pndntls
Douglas fclr Plywood
WedgeWood Plywood Hardwood Plywoods and Veneers
CPX Plastic-Faced Plywood Ciant-Sized Scarfed Panels Fir and Hardwood Doon
Douglas Fir Lumberand Timbers Western Pine Lumber
Cypress and Redwood Lumber Western and Southern Mouldings Southern and Appalachian Hardwood Lumber Long Leaf and Short Leaf Pine Lumber and Umbers Residential and Factory Flooring
Treated Lumber and Timbers Poles and Piling
Divisional Sales Offices
Eastern, JO2 Marsh Street, Port Nmcark, N. /. Midwestern, OSS South Michigan Acenue, Chicago 4, Ul. Southern, Southern Finance Building, Augusta, Go. Western, BOO North Copilot Way, Olympia, Wash,
Wholesale Distributing Warehouses
Birmingham, Ala., SH North 28th Street Boston, Mass., Cattle ldtmd Terminal Chicago, III,, 180$ Bryn Meier Acenue Columbia. S. C, Key and Bluff Roadt Detroit, Mich, 5159 Laratne Acenue Lancaster, Pa, 250 North Plum Street Louisville, Ky., 1239 South 10th Street Memphis, Term., 1333 South Kantot Street Nashville, Term, flarHton at 7th Acenue New Hyde Path, Y, Second Acenue 6 4th Street Orlando. Fla., 734 BmoUtmen Dries Philadelphia, Pa, ftcr 179 North, Delaware nicer at Allegheny Acenue Pittsburgh, Po, 33rd ir Liberty Streets Port Newark, N. J,, JOS Marsh Street Providence, R. L, Horhonlde Industrial Pari Raleigh, K. C, 14$1 Conrtland Drive Richmond, Va, 1910 Petersburg Pike Suvonnuh. Cu, Sttica Acenue 6 tMiisdllr Bond Vineland, X. J.,417 Oxford Street
Mills
Olympia. Washington
Stcdivuod, Alabama
Bellingham, Washington Dumas; Arkansas
Springfield, Oregon
Jackson, Mississippi
Hoquiam, Washington
Cleveland, South Carolina
Savannah, Ceorgin
Fairfas, South Carolina
Toleilo, Oregon
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