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1984 ANNUAL R EPORT PLAINTIFF'S EXHIBIT GP-1345 iiA-r-iutii SGP 0029993 G m eorgia-Pacific Corporation is one of the world's largest forest products companies, founded in Augusta. Georgia, in 1J27 as a whoiesaicr of hardwood lumber. G-P has div ersified its original lumber business to include a comprehensive assortment of building materials. Our building products distribution system, with 1-42 branches in -4 7 states, is the most extensive in the industry. In the 1950s. G-P expanded its business to include the production of pulp and paper, and in the late l50s we began to produce chemicals related to our forest products. f To help supply 221 production facilities with raw materials. G-F is a major landholder with 5.-4 million acres of timber under management in Xorth America, as well as substantial reserves of gvpsum. coal and natural gas. twrt.mmxAyptatic's v.O'inii btybeds $ 3Lo ^ulb^'a'C! 1'8 other Ofnaiinns 31 a ci cCr\: v. i'.iic. cC T v.c\ci SGP 0029994 (Dollar amounts and shares are in millions) Net sales Income from continuing operations Net income Per common share--fully diluted Income from continuing operations Net income Depreciation and depletion Cash provided by continuing operations Cash dividends paid Total assets at year end Return on beginning common equity' Cash dividends declared per share of common stock Shares of common stock outstanding at year end Number of common shareholders of record Number of employees 'Incomefrom continuing operations --t -"rKl jevknBfr.'. si--yvna jc/m > HIGHLIGHTS 1984 $ 6,682 253 119 2.24 .97 282 521 86 4,785 12.6% $ .70 103 79,000 40,000 1983 $ 6,040 75 105 .54 .82 289 453 76 4,732 3.8% $ .60 102 80,000 39,000 Percent Change 11 237 13 315 18 (2) 15 13 1 232 17 1 (1) 3 CONTENTS Letter to Shareholders 2 Financial Performance 6 Resources and Opportunities 8 Management's Discussion and Analysis 24 Independent Auditors' Report 27 Financial Statements 28 Notes to Financial Statements 32 Operating Statistics 45 Five Year Selected Financial Data 46 Sales & Operating Profits by Industry Segment Directors & Officers 48 47 SGP 0029995 1 G E OR 6 \ A - P A C l F t C COUP 0 R A T t Q M LETTER TO SHAREHOLDERS eorgia-Pacific's performance during 1984 continued to improve and reflected progress in our program to increase returns and to build a base for more stable earnings. During the year we sold, or undertook to sell, a number of assets and acquired or invested in others that are better suited to our corporate strategy. We also further increased the proportion of more profit able specialties in our product mix and reduced our dependence on variable rate debt. Our primary objective continues to be to increase the return to our shareholders. In this connection, we were pleased that in the third quarter, the Board of Directors approved an increase in the quarterly dividend to 20 cents per share from 15 cents. Sale of our commodity chemicals segment, including our oil and gas subsidiary, Exchange Oil & Gas Corporation, is expected to generate a substantial amount of cash for reinvestment in other areas of the business. The commodity chemicals business was sold for $192 million in cash (and securities valued at approximately $70 million) to the executive group that had been managing the operations. We will retain our thermosetting resin business, which is closely related to our plywood and wood panel operations. Those chemical by-products derived from the papermaking process will also be retained. SGP 0029996 2 Marshall Hahn at a Georgia-Pacific loblolly pine plantation in central Georgia. Our income from continuing operations rose to $253 million in 1984, more than three times the $75 millit n in 1983. Included in the 1984 results is a non-operating pre-tax gain of $19 million from the sale of our office building in Portland, Oregon. The 1983 results from continuing operations included a $135 million pre-tax charge from asset disposals and write-downs. During 1984, we recorded an after-tax loss of $134 million from discontinued operations, including $160 million from the sale of our commodity chemicals business and the planned sales of Exchange Oil & Gas and other chemical facilities. This lowered 1984 net income to $119 million, compared with the $105 million reported in 1983. Looking to the future, we plan to develop our pulp and paper business to a size and profitability comparable to our building products segment. A better balance between these two sectors will allow us to make more efficient use of our timber resources and also help reduce further our exposure to the residential construction cycle. We took several important steps toward this objective during 1984, including a major acquisition of linerboard and corrugated container capacity and several important capital projects at existing facilities. In July, we acquired a modern, world-class linerboard mill at Monticello, Mississippi, approximately 275,000 acres of timberlands, SGP 0029997 3 16 corrugated container plants and other related assets, including working capital, for approximately $360 million. This acquisition added linerboard capacity in the Eastern United States to complement our production at Toledo, Oregon, and serve our sizable Eastern container operations. The acquired timberlands will be of particular benefit to Georgia-Pacific because of their location. We can use the larger timber first for building products, its highestvalue application, and then utilize the lower-value residuals in our pulp mills. The acquisition also enhanced our position in the corrugated container business, where we have a history of successful operation and expansion. In addition to this major acquisition, we undertook or continued several major projects at existing pulp and paper mills. The equipment conversion program at our Palatka, Florida, and Crossett, Arkansas, mills moved us further into higher-margin grades of bleached paper and board. We also announced plans to install one of the world's largest white paper machines at our Port Hudson, Louisiana, pulp mill. The paper business was strong for much of 1984, although domestic demand for some grades softened when the economy slowed after mid-year and many paper markets weakened near year-end. The strong dollar put U.S. producers at a competitive disadvantage to foreign competitors in export markets, but markets for pulp, printing and writing papers, kraft, linerboard and containers were generally stronger than in 1983. This strength and Georgia-Pacific's increased focus on higher-value-added products enabled us to report record operating profits in our pulp and paper business-$202 million in 1984, up from $71 million in 1983. Results from the acquired assets thus far have surpassed our expectations. We expect to realize increasing benefits from these investments, as well as from the upgraded and modernized equipment at key locations. We also expect that demand and prices for our tissue products will improve. Markets for pulp and some grades of our paper, however, are expected to be depressed. While we have targeted our paper business for expansion, Georgia-Pacific con tinues as an industry leader in building products, with modern, efficient facilities and the industry's strongest distribution network. We increased our penetration of the markets for materials for home remodeling, repair and additions, and for industrial and commercial uses. We were also able to direct more of our wood products into specialty markets and increase sales of oriented strand board and waferboard for use in commodity applications. Performance in the building products sector was strong, despite the soft prices for lumber and plywood for a large part of the year caused by Canadian imports and excess manufacturing capacity in the industry. We reported operating profits in this segment of $379 million, up from $354 million in 1983. NET SALES (billions) $7 0 1 ao 81 82 83 84 INCOME FROM CONTINUING OPERATIONS (millions) $270 $160 80 81 82 83 84 SGP 0029998 4 Your Board recently announced several new executive appointments which represent a step in our company's program of planned management succession and illustrate the depth of our management talent throughout Georgia-Pacific. Robert A. Schumacher was elected president and chief operating officer. Bob has made excellent contributions to Georgia-Pacific's growth in the paper business during his 22 years as an executive with our company. Recently, he has been playing a central role in developing and implementing our strategy of expanding that business to balance our large building products operations. We are fortunate to have his talents available as president and chief operating officer. Conrad Schweitzer, previously group senior vice president-pulp and paper, succeeded Bob Schumacher as executive vice president-pulp and paper and joined the company's executive management committee. In our building products business, Harold L. Airington, previously vice presidentwood products sales, was elected group senior vice president-building products and also joined the executive management committee. James C. Van Meter, executive vice president and chief financial officer, was given added responsibilities for the chemical operations retained after divesting our commodity chemicals business at the end of 1984, as well as for Exchange Oil & Gas until it is sold. During the coming year, we expect a highly competitive environment in the markets we serve. We remain confident, however, of our ability to move your company forward toward our objective of improved returns. I know you will join me in thanking all Georgia-Pacific employees for their fine efforts in helping to make our company productive and prosperous. T. Marshall Hahn, Jr. Chairman and Chief Executive Officer February 15, 1985 SGP 0029999 5 G E 0 R GIA-PACIFIC CORPORATION FINANCIAL PERFORMANCE During the past two years, Georgia-Pacific has implemented financial policies aimed at improving the return on our assets, reducing exposure to increases in interest rates and providing flexibility to take advantage of investment opportunities. The objective of these policies is to improve the return to shareholders. Key elements include: Review of the returns on existing operations and redeployment of assets where appropriate; Disciplined analysis of proposed capital expenditures and audits of completed projects; Creation of incentives for operating management to control working capital; Use of leverage which is aggressive, but at the same time ensures access to all major capital markets to take advantage of investment opportunities, and Use of a combination of fixed and floating rate debt appropriate for our business, which combines investments in resources and plants with a major distribution operation. As a result of this approach, we made several large divestitures, a major acquisi tion and initiated about $400 million in internal capital projects in 1984. RETURNON BEGINNING COMMON EQUITY RESULTS In 1983, we began an asset-review program and sold or wrote down $135 million in assets that were underperforming or did not fit with our core forest products businesses. This review and the asset disposals that resulted from it marked the beginning of our move to simplify our business by concentrating on areas where we can best achieve superior returns. During 1984, we realized $192 million in cash and securities valued at about $70 million from the sale of our commodity chemicals business and anticipate raising a sub stantial amount of cash in 1985 from the sales of Exchange Oil & Gas and certain other chemical facilities. To enhance profitability in our key areas of operation, we invested $710 million in capital expenditures during 1984. This included $308 million for a major acquisition, improvements at the acquired locations, $137 million in our building products sector and $185 million in our pulp and paper business. At year-end, we were close to our target total debt-to-capital range of 30-35 percent, and expect to achieve that level early in 1985. This will give us the financial flexibility to take advantage of internal or external investment opportunities. By year-end 1984, our variable-rate debt was $284 million, compared with $599 million a year earlier, and interest expense was down to $156 million, a reduction of 16 percent from the peak of $186 million recorded in 1982. TOTAL DEBT/CAPITAL SGP 0030000 6 PERFORMANCE MEASUREMENT We believe that the most important measurement of a corporation's performance is the return realized on shareholders' equity. We publish a number of ratios which measure our returns including return on beginning common equity. In 1984, that ratio climbed to 12.6 percent from 3.8 percent in 1983. This rise is due to our improved profitability in building products, pulp and paper in 1984. Return on beginning common equity equals our income from continuing operations divided by common shareholders' equity at the beginning of the year. 1985 PLANS During 1985, we anticipate spending approximately $700 million on capital projects. More than 65 percent of that amount will be spent on our pulp and paper plants, as we continue to expand that segment. We anticipate that our cash flow from operations and available financing sources, together with proceeds we expect to realize from asset sales, will be sufficient to cover these expenditures. Today's cost of equity and debt capital is high, and we do not believe that this situation is temporary. Because of this, business enterprises must realize higher returns than in years past. Georgia-Pacific is committed to developing high-return investments and earning an appropriate return for our shareholders. CURRENT ASSETS/ CURRENT LIABILITIES 2.1 i a 14 11 1 I \ ) | :] i `aXA $ 1 u 7 ,i 1 A i i 3 1 ' j 0 4{ i 3 a 80 81 82 83 84 CAPITAL EXPENDITURES BY Building Products H PulpS Paper H Corporale 5 Other CD Timber & TlmUerlands SGP 0030001 7 GEORGIA-PACIFIC C 0R P0R AT I0 M RESOURCES AND OPPORTUNITIES Z7 rom its founding, Georgia-Pacific has been characterized by innovam ' tion, adaptability, and the foresight and determination to be where JL the action is and to get there early. We started as a wholesaler of hardwood lumber shortly before the Great Depression. Despite the economic con ditions of those times, we successfully began manufacturing wood products that our marketing experience indicated would have good growth potential. In the early 1950s, we made a major geographic move toward our industry's newest and most promising frontier when we relocated our corporate headquarters from Georgia to the Pacific Northwest. At that time, the young Douglas fir plywood industry was experiencing rapid growth. As we anticipated, plywood soon became an industry staple and Georgia-Pacific grew to become a major force in the forest products industry. In the years following that move to the heart of our industry's growth area, Georgia-Pacific ranked high among the nation's fastest-growing corporations, adding pulp and paper through construction of new facilities and many acquisitions. To take advantage of rapidly developing market opportunities, we soon began to acquire timberlands and to locate the bulk of our manufacturing facilities in the rapidly growing Sunbelt. Georgia-Pacific created the next major wood product opportunity by pioneering the development of Southern pine plywood. This provided our company with a strong competitive edge in a new growth sector. 8 SGP 0030002 A new day dawns at our Crossett, Arkansas, pulp andpaper mill, where two paper machine conversions will add value and profitability. Pine plywood also established the foundation for a substantial new Southern industry and played an important role in shifting the focal point of the fores products industry southward. By the late 1970s, most of our business was east of the Rockies and, in 1978, we announced a headquarters move to bring management closer to our principal operations and markets. The relocation has been extremely effective in improving our ability to focus on the most promising growth areas. Since that time, we have taken strong action to adapt to the business environment of the 1980s, which is characterized by high cost of capital and Intense competitive pressures. This has included significant divestitures, write-downs and a large acquisition, with other acquisitions that fit our growth strategy anticipated in the future. Our strategy is focused on one primary objective-to increase the value of Georgia-Pacific to our shareholders. We are accomplishing this objective by simplifying our business, by operating in our areas of expertise and strength and by efficiently producing quality products that will fulfill customer needs today and in the future. RECONFIGURATION 1986 SALES lesnmaled) Building Products 3 Pulp 8 Paper 2D Chemical I Other SGP 0030003 9 GEO R G I A - P AC t F I C COR P PULP AND PAPER AL__ n s the industry leader in building products, G-P's decision to expand / A our pulp and paper segment makes good business sense. By comple-L. _JL menting our large building products business with pulp and paper operations of similar size, we can better balance our financial performance and more effectively utilize our timber resources. LINERBOARD AND CONTAINERS At mid-year, we acquired one of the country's largest linerboard mills, 275,000 acres of timberlands, cutting rights on an additional 50,000 acres and 16 corrugated container plants. This achieved our long-stated objective of adding linerboard capacity in the East to complement our Western production at Toledo, Oregon, and also further advanced our position as a major national supplier of corrugated packaging. Located in Monticello, Mississippi, this mill is strategically situated to ship linerboard economically throughout the Sunbelt and central United States, as well as to export markets. During the 1960s and 1970s, Georgia-Pacific gained a leadership position in the West Coast container industry. We became a national factor in 1981, when we acquired nine corrugated container facilities in the East. The box plants acquired in 1984 brought our total to 31 facilities nationwide. Our plants have grown steadily in production volume and are among the industry's lowest-cost producers. 10 CONTAINERBOARD (millions of fonsl 82 B3 84 86 86 esi esi SGP 0030004 Georgia-Pacific's newly acquiredpulp andpaper mill at Monticello, Mississippi, more than triples our linerboard capacity, moving us from a net buyer to a net seller ofcontainerboard. Today, we are aggressively developing our capabilities to take advantage of the higher profit margins avaMable for specialty containers. Much of our corrugated box output in the West has been developed to meet the customized needs of our agribusi ness customers. We produce specialty containers made from E flute, triple wall and wax impregnated board, as well as lithograph CoralureMany of these specialty containers sell for a higher price per ton than fine papers. Last year we began a major moderniza tion and expansion at five of our existing container operations to allow increased production of specialties, and we will continue to improve our facilities in 1985. CORRUGATED CONTAINERS (billions ol square leeil WHITE PAPER During 1984, we continued to increase our production of bleached grades of paper, with new and converted equipment at several major facilities. We also announced plans to install one of the world's largest white paper machines at our Port Hudson, Louisiana, pulp mill. This new machine, associated working capital, related mill improvements and other costs will total approximately $200 million. Start-up is scheduled for the third quarter of 1986, with production of approximately 650 tons per day of forms bond, offset and other printing grades, including cut-size bond. We are also installing a steam turbinegenerator that is expected to produce a significant amount of Port Hudson's energy needs. 82 83 84 B5 86 est est SGP 0030005 11 Last year, we also continued our $100 million conversion program at Palatka, Florida, and Crossett, Arkansas, to produce more bleached grades and shift unbleached production to the most efficient equipment. Our two machines at Crossett are being converted from kraft to printing paper and bleached board. UNBLEACHED KRAFT Demand for unbleached kraft has been declining in recent years because of growth in the use of plastics for bags and sacks. The Crossett/Palatka conversion reflects a realistic assessment of the kraft paper market as it will exist in the years ahead, as well as our commitment to redirect our mills to address that market. Our kraft production will be consolidated at Palatka, where we have newer, faster and more efficient equipment for these grades and existing capacity that can accommo date customer demands. We will have the capacity to produce about 250,000 tons of kraft annually on two machines at Palatka, about 80 percent of which will be unbleached. We will convert approximately one half of this output into higher-value products at our bag and sack plants at Palatka and at Richmond, Virginia, as well as at our multiwall bag plants in Hamlet, North Carolina, and Pine Bluff, Arkansas. The remainder will be sold in U.S. and export markets. SGP 0030006 12 Our Coronet tissue has been one ofthe fastestgrowing consumer tissue brand namesfor the past threeyears. In line with this program, we are eliminating kraft paper production at the Monticello mill by converting the kraft machine to linerboard production. We have already changed the mix bn that machine, increasing output of lightweight linerboard and reducing kraft. TISSUE Georgia-Pacific again registered a strong performance in the tissue industry in 1984. Our consumer and commercial tissue businesses generated $507 million in sales in 1984, up 13 percent from $449 million in 1983. Those figures included impressive gains in our brand-name products-Coronet Delta Mr. Big Hudsonand MD-as well as a strong increase in sales of our Cormaticline through our commercial systems division to the "away-from-home" markets. Coronet has been one of the nation's most rapidly growing consumer tissue products over the past three years. Almost two-thirds of Georgia-Pacific's sales are brand-name consumer tissue products, and that proportion is increasing. Tissue sales tend to resist economic fluc tuations, and our progress in this sector helps stabilize our earnings. CORONET*BRANDS SALES GROWTH percent increase in dollar volume) Coronet * H Industry Average' 'Source SAMI SGP 0030007 13 GEORGIA The fastest-growing components of our tissue business are sales of napkins, food wrap and other paper accessories to the fast food industry. Last year, sales of these products increased nearly 30 percent. MARKET PULP Pulp markets were satisfactory during early 1984, following a Canadian strike which reduced supply significantly. However, prices weakened quickly during the second half of the year as the Canadian strike was settled, substantial new capacity came on line worldwide and the dollar continued its rise against foreign currencies. We will be reducing our market pulp exposure during 1985 and 1986 as our white paper projects are completed. PULP MILL BY-PRODUCTS The new and converted equipment at our major pulp mills will allow Georgia-Pacific to upgrade more of our own pulp production to higher value-added paper products. In addition, we will also continue to upgrade the by-products from the pulpmaking process into specialty chemicals. SGP 0030008 14 Our Woodland, Maine, whole-tree-chip handlingand screeningfacility typifies Georgia-Pacific'spulp and paper capital improvement emphasis. For example, our Southern pine pulping operations at Crossett, Palatka, Port Hudson and Monticello yield soap skimmings that we convert into crude tall oil. We distill this crude product into five fractions and upgrade the rosin acid fraction into rosin size for papermaking. After further refining, the other fractions can be used to make such products as adhesives, waxes, synthetic rubber, paints, lacquer and inks. At Bellingham, Washington, our sulfite pulp facility also yields a variety of useful chemical products, including ethanol and lignosulfonates, which are used in the manu facture of products such as oil well drilling mud additives, and binders for road surfaces and animal feed pellets. OUTLOOK We expect to continue to benefit from the many investments we are making in the pulp and paper segment of our business. While markets for pulp and some grades of paper are expected to be weak in 1985, our current production capabilities and our plans to take advantage of promising opportunities that meet our return standards, will help generate superior returns from this segment for Georgia-Pacific's shareholders. PULP 8 PAPER GROUP GROWTHS RECONFIGURATION (millions of tons of capacity) "71 3 2 _0 83 84 8b 86 est esl 3 Market Pulp 3 Course Kralt 3 Tissues Sanitary 9 Printing & Fine Paper Paperboard SGP 0030009 15 n m m eorgia-Pacific is a leader in the building products industry, and during m 1984 moved aggressively to assure continued leadership in this important sector. With the majority of our productive facilities and natural resources located in the South, we are strategically positioned in our nation's major growth area. We also benefit from the industry's largest and most successful building products distribution network which serves this demand and capitalizes on changes and opportunities in the marketplace. Our building products operating profits increased to $379 million in 1984, up seven percent over 1983. Sales of $4.5 billion in 1984 were up eight percent over 1983. This improvement was achieved despite flat housing starts compared with 1983 and low prices for major wood products such as plywood and lumber because of excess industry manufacturing capacity and, in the case of lumber, competition from Canadian imports. The increased profitability was primarily attributable to our ability to manage costs, our penetration of non-housing markets, strong markets for gypsum wallboard, and a greater focus on higher-profit product lines. 16 SGP 0030010 Marketing strength andflexibilityfrom Georgia-Pacific's Building Products Distribution Division generated nearly $4 billion in sales during 1984. DISTRIBUTION The Distribution Division comprises 142 branches covering every major metropolitan market. It gives us the ability to move our products to our customers and provides information on the changing pattern of demand for building products. During 1984, this division generated $3.7 billion in sales, or more than $14 million each day, up seven percent over 1983. For the third consecutive year, we sold more building products for home remodeling, repair and additions than for new residential housing construe tion. We expect this trend to continue. During 1984, 45 percent of our Distribution Division's sales went to this remodeling/repair market. The professional installer and the do-it-yourself : homeowner who make up the remodeling and repair market purchased over $24 billion in building products last year, and trends indicate continued growth. Because this market is less interest-sensitive than new housing, BUILDING PRODUCTS DISTRIBUTION CENTERS SGP 0030011 17 GEORGIA C CORPORATION it provides addit onal balance and stability to our financial performance. Gains in commercial and industrial markets in 1984 further decreased our dependence on new home construction. Sales to the housing market accounted for 34 percent of the division's sales last year. We are currently examining new higher-margin products that would further balance our business and improve profitability. Over the years, management has con sistently added new items to broaden our product line for existing customers and to attract new ones. To further control costs and increase efficiencies in our distribution system, last year we consolidated operations of our branches at Tacoma, Washington, and Texarkana and Beaumont, Texas, into larger neighboring centers. These consolidations brought the number of G-P distribution centers to 142 nationwide. Similar consolidations of 12 distribution centers in 1982 demonstrated the benefits of serving customers from larger centers in some locations. GYPSUM DIVISION Georgia-Pacific's Gypsum Division results improved substantially during 1984, reflecting increased market demand for gypsum products. Because of weight considerations, gypsum products are impractical to ship long distances, and Georgia-Pacific's gypsum 18 For the secondyear in a rowgypsum wallboard was one of Georgia-Pacific's mostprofitable product lines due to strong demand and new uses. wallboard facilities are located primarily east of the Rockies, where market demand is greatest. Responding to ti e greater demand for gypsum wallboard products in late 1983, we reopened our facility at Grand Rapids, Michigan, increasing our 1984 manufacturing capacity by seven percent. BUILDING PROOUCTS SALES TRENDS BY MARKET CATEGORY (billions! Our Gypsum Division has developed and has a patent pending on a new gypsum wallboard product designed for use in the fast-growing exterior insula tion systems industry. The product, Dens-Glass"1 is scheduled for release in 1985 It will be used for exterior sheathing and in applications where moisture is a potential problem. STRUCTURAL PANELS Our plywood plants continued to improve productivity with installation of the latest technology such as computerized log-positioning devices and powered backup rollers. We continued to improve the efficiency of our use of timber resources by expanding production and distribution of oriented strand board (OSB) and waferboard for commodity uses such as roof and floor decking and sidewall sheathing and converting the production of our plywood plants to higher-margin specialties. In 1980, only 30 percent of our Southern pine plywood production _! New Residential 3 Commercial/lndustnal M Remodeling. Repair & Addition t Housing Slaits(millions| SGP 0030013 19 CIFIC CORPORATION was used in specialty items such as siding, concrete form and Sturd-I-Floor rated plywood. In 1984, that proportion had doubled to approximately 50 percent. OSB and waferboard, structural panels made from small wood strands or wafers, continue to receive excellent reception from homebuilders as well as from the do-ityourself market. For some uses, these products are preferred over plywood because of performance characteristics and attractive prices. Last year, our sales of these newgeneration structural panels were $92 million, a 100 percent increase over 1983. During 1984, we continued construction on two large OSB facilities at Skippers (near Emporia), Virginia, and Grenada, Mississippi, each of which will have annual capacity of approximately 250 million square feet. These plants are expected to begin operation in mid-1985. The company already operates an OSB plant at Dudley, North Carolina, and a waferboard plant at Woodland, Maine. During 1984, we also announced our intention to build a fourth OSB facility. CHEMICAL SEGMENT REVENUES I millions! S9M $600 $300 RESIN DIVISION GROWTH In conjunction with our development of structural panels, we began operation of a facil ity at Crossett, Arkansas, to make powdered thermosetting resin for use in the manu facture of waferboard. Using state-of-the-art technology, this plant is the first in the U.S. dedicated to the rapidly growing waferboard industry. We expect to produce 0` 30 81 82 83 84 23 Continuing Operations 9 Discontinued Operations 20 SGP 0030014 Georgia-Pacific sales into the remodeling, repair and additions market, ofwhich the "do-it-yourself" segment is the largest component, exceeded new residential salesfor the thirdyear in a row. approximately 22 million pounds per year of spray-dried resin and anticipate that this new facility will help maintain our leadership position in wood products adhesives. Our resin division-consisting of 14 plants-fits well with our wood panel BUILDING PRODUCTS SEGMENT EARNINGS manufacturing and marketing operations, and we have excellent research and PER HOUSING STARTlhundredsI development facilities to help us take advantage of the many opportunities in this business. OUTLOOK Georgia-Pacific has efficient, well-located manufacturing facilities, the industry's strongest distribution network and the ability to use these assets profitably. During 1985, we expect further progress in our building products business as we continue to lessen our dependence on the residential building market and improve the profitability of our product mix. Although our planning assumes housing starts will decline slightly in 1985 to approximately 1.65 million from 1.75 million, Georgia-Pacific has a strong presence in the Sunbelt where the greatest housing activity is expected to occur. 3 Georgia-Pacilic* 3 Nine Leading Pioduceis laveiagel" Housing Starts Imillionsl Eicludingflesm Earnings ** Souice Paine Webber SGP 0030015 21 1 C jO fl P 0 R . eorgia-Pacific has been a leader in resource management since G acquiring timberlands in the early 1950s to assure long-term supplies at our plants and mills. Today, we manage 5.4 million acres of timberland in North America under a comprehensive program to improve utilization of this valuable renewable resource through the application of technology and use of materials formerly regarded as waste. We own mineral rights on most of our timberlands and receive royalty income from coal, oil and gas which underlie much of our Appalachian and Southern forests. We also own 121 million tons of recoverable gypsum rock-52 years' supply at our 1984 production rate. During 1984, we acquired 275,000 acres of prime Mississippi timberland in con nection with our acquisition of the Monticello, Mississippi, linerboard mill. These lands will provide sawtimber and pulpwood for our nearby building products facilities, as well as the paper mill. The program to enlarge our paper business to a scale comparable with our large building products operations will help improve timber utilization. We will use our larger SGP 0030016 22 Georgia-Pacific continues to improvefiberproductivity with advanced tree improvementgenetics at seed orchards and seedlinggreenhouses strategically located nationwide. timber for building products. The remaining smaller-diameter timber, combined with our manufacturing residuals, will provide a low-cost and dependable supply of material for our pulp and paper mills. To promote better growth on our timberlands, we conduct tree-genetics programs in each of our forest management regions. Last year, we grew more than 15 million '`superseedlings'' chosen for genetic qualities that result in superior growth, conformation and disease resistance. In the Northwest, our second-growth Douglas fir is in various stages of maturity. This "stair-step" forestry is designed to provide mature timber for our plants and mills on a continuous basis. Georgia-Pacific's 5.4 million North American acres provide about half of our fiber requirements. We view this balance of fee-ownership with open market purchases as a hedge against timber market fluctuations. TIMBER RESOURCE BASE North America (acres] Owned in Fee 4.920,000 Controlled 480,000 5,400.000 Regional Timber Oislrihutron 3 Eastern U.S and Canada 'J Southern U.S. il Western U S SGP 0030017 23 GEORGIA PACIFIC CORPORATION '- v 1 . ^ r.r'}Wv ` Ah w * 1 ,i^* nji;ii)u .ui;c \ di'Aj^rtas^i^yi r , Vif A Hr jc)it>V(oi*.(l l> ( )PtiTc\rtf{l(ij<|t)Ji> 'fs(ohT ItWiffqo! < )r 1 ,``tl il ^ t s < uillliOiiiui^^ii^y-D ^illHbiit ii h^h-W , c' H u), '/ rir cJcm'p, ta\ I1!!.''?'4niH ^jtic ,, cm I 1 ,%_, miflijiil !'d cjUcJfU lr)Vt !rp L )u,i>)f'\ iFji``4-`I w" (tlTirJeWjirti^q^^^y^vV ! l|tlllf(0,l s >* ', \\ H 1 ^TuH1 ^'J"1 `$44,'fl ''" ' l i ml li i ii'0(V(l( 'tjtiiflJriV/J ti rJV* `ri O'1 t`c)(rl c)ur?V't?<J <J0{ Vic,tl ^ 1 ,f / ,` , -|W rj(;" TfplnFSninftl^inf^^tr'^lr`wFrcT"' 7-"'-jr11c-mr--*>Irt--........~'(J............. ,(" 1C. |HMj^.\jf^ic^ij^i3(f<&j *^TT?tri t" -,( f *i y * * ''*':' \TT^fv'2i- \ * r I f'-vn :.v .Jtf.i'KA :,nFlO ?^OfflJ)4i!):>iiil!|f. )( > r Jo Itlc'<. lt(.clliT'ly olf*4(| ?(Ul' <)j Hr Wlfhojrl i 'i ^rijfiTintott 1 cp Mfriw '"j Vv ' i? * 7C ^ t 11ci i nci r t w- ia j ... i!lrU';iC.ii)c;T;Fifflr.tc)ri':E^IW-'j''i'liTc<l;'c!fl.y^f)rtl-JOcjQCUiv)i!re(,;. -liTltTjST)!) hcl uliO'ii it cfljQfi^lltf-rlfil'iA'lt i I y "li "(ill chi ` -h ]rjyi cj /ia p id rlc> ylc, ill'll iJircjmVWO >M >, lc nit] r'-c 'fiy'ld1 `'Irufilipi'^liWr,T~/fH vt- 'Hjil ^ J hTld 'nui.kt|%rljl-5 ;i;:c|tlliyhcl;)rlifS{^)r!itc)criWl!ci^}!i!:ili..r/.<tJr.)ct(ljtcrr'l<fl.'.-:lr.A'i:. initi ill ^jrjjifij.aIKOHipfjyH tOfhj A/iHVltTFi'Oi v (i .i iclr.foivvUlcjnM:t;>oljrowelo'ViHlt'i'iy 1:1 |S)n(i:lotjMI;:1 olellotOsl.'-i rrjiK iiA c nr?.ui. ^ i tl(J!(6!rt5rto)\\)f1 II V `If l`)T rt fit itT^^U^O' '!,J C 'H I ml it * J iric I c|lir)l Io)5H^'1i (I V Ti< il ^rVcl^O - << ic(cl I I II 1 )i rl hc11 M rVW cl 1 jcr ill i i > I )r1 mi licV ,i li `ftfilrl '.l in dl ^rJchjtii t( ! u ini hi . i ,.[i|r'cl,,>y1Oc'l 5c Irlcici.jjH.tJnluili r .clltlcl i>i.Oi,i . ,il(i ijin ... ,.r. ji. . yf)t.) 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