GEORGIA-PACIFIC REPORTS 1992 RESULTS
ATLANTA, Jan. 21 /PRNewswire/ -- Georgia-Pacific Corp. (NYSE: GP) today reported a net loss of $124 million ($1.43 per share) for 1992, which includes a one-time, after-tax charge of $55 million (64 cents per share) for accounting changes for deferred income taxes and a $9 million (10 cents per share) after-tax loss on early extinguishment of debt. Also included in the loss is a $69 million pretax charge for additional depreciation and depletion, which was more than offset by a reduction in income tax expense of approximately $83 million, as a result of the accounting change, and a non-cash, pretax charge of $66 million for stock compensation programs. In 1991, the company reported a net loss of $142 million ($1.65 per share), which includes $72 million (84 cents per share) of after-tax gains on asset sales, a $45 million (52 cents per share) after-tax loss on early extinguishment of debt and a one-time, after-tax charge of $63 million (73 cents per share) for accounting changes. Sales in 1992 were $11.8 billion compared with 1991 sales of $11.5 billion. The company generated free cash flow in 1992 of approximately $535 million, composed of $868 million in cash provided by operations and $51 million net proceeds from miscellaneous asset sales, less capital expenditures of $384 million. Total debt on Dec. 31, 1992, was $5.8 billion, a decrease of $332 million from a year ago. The company's building products segment reported record operating profits of $691 million in 1992 versus $344 million in 1991. The pulp and paper business experienced an operating loss of $8 million compared with profits of $362 million a year ago. The 1992 results include additional depreciation and depletion of $4 million for the building products segment and additional depreciation of $65 million for the pulp and paper segment, related to the adoption of the new income tax accounting standard. Georgia-Pacific also reported net income of $104 million ($1.21 per share) for the 1992 fourth quarter ended Dec. 31 compared with a 1991 fourth-quarter loss of $67 million or 78 cents per share. The 1992 fourth-quarter results include a pretax loss of $118 million and an income tax benefit of $231 million. The large tax benefit for the quarter results from pretax results for the year being lower than anticipated when providing for taxes at the end of the first three quarters. Included in the quarter is an extraordinary loss of $9 million (10 cents per share) on early extinguishment of debt and a $17 million charge to the operating segments for additional depreciation and depletion related to the new income tax accounting standard, as well as a non-cash, pretax charge of $27 million for stock compensation programs. The 1991 fourth-quarter results included $27 million (31 cents per share) of after-tax gains on asset sales and a $45 million (52 cents per share) after-tax extraordinary loss on early debt retirement. Building products operating profits for the quarter were $147 million, a fourth-quarter record, vs. $77 million in 1991. The pulp and paper operating loss for the quarter was $71 million compared with $49 million of profits for the same period a year ago. The 1992 pulp and paper results include an additional $16 million depreciation charge resulting from the new income tax accounting standard and a $28 million charge for the writedown of certain facilities to net realizable value. "Our building products business has achieved a record year," said T. Marshall Hahn Jr., chairman and chief executive officer. "This year, we anticipate that the best performance in our building products business again will come from lumber, plywood and oriented strand board. Demand and prices for structural panels and softwood lumber remain very strong. Our building products business continues to be positively affected by timber supply restrictions in the Pacific Northwest," Hahn continued. "In addition, structural panel and lumber supplies and prices recently have been affected in the South by excessive rain, which has significantly reduced log inventories. "In pulp and paper, we are operating in an intensely competitive environment with over capacity and weak prices," Hahn said. "World pulp inventories increased and prices decreased in the fourth quarter, and these pressures continue. Demand for our communications papers is fairly good but prices continue to be weak due to over capacity. As the economy continues to recover the industry's new capacity will be absorbed, but it will take time," he said. "Demand for containerboard and packaging continues to be strong. "We head into 1993 cautious but confident with a strong presence in our major markets; world-class, efficient and low-cost manufacturing facilities; as well as nationwide paper and building products distribution networks," Hahn concluded. A tabulation of results follows: GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES Operating Highlights (Dollar amounts, except per share, in millions) (unaudited) 3 mos. ended 12/31/91 Including Excluding 3 mos. ended Asset Asset Asset 12/31/92 Sales Sales Sales NET SALES Building products $ 1,502 $ 1,308 $ --- $ 1,308 Pulp and paper 1,403 1,478 --- 1,478 Other operations 5 6 --- 6 Total net sales $ 2,910 $ 2,792 $ --- $ 2,792 OPERATING PROFITS Building products $ 147 $ 77 $ --- $ 77 Pulp and paper (71) 49 --- 49 Other operations 1 3 --- 3 Other income --- 43 43 --- Total operating profits 77 172 43 129 General corporate expense (54) (39) --- (39) Interest expense (133) (144) --- (144) Cost of accounts receivable sale program (8) (12) --- (12) Income (loss) before income taxes and extraordinary items (118) (23) 43 (66) (Provision) benefit for income taxes 231 1 (16) 17 Income (loss) before extraordinary items $ 113 $ (22)$ 27 $ (49) Extraordinary items, net of tax (9) (45) --- (45) Net Income (loss) $ 104 $ (67)$ 27 $ (94) Per share: Income (loss) before extraordinary items $ 1.31 $ (.26)$ .31 $ (.57) Extraordinary items (.10) (.52) --- (.52) Income (loss) $ 1.21 $ (.78)$ .31 $ (1.09) Average number of shares outstanding 86.5 86.1 86.1 86.1 GEORGIA-PACIFIC CORPORATION AND SUBSIDIARIES Operating Highlights (Dollar amounts, except per share, in millions) (unaudited) 12 mos. ended 12/31/92 Including Excluding 12 mos. ended Asset Asset Asset 12/31/92 Sales Sales Sales NET SALES Building products $ 6,112 $ 5,405 $ --- $ 5,405 Pulp and paper 5,711 6,089 --- 6,089 Other operations 24 30 --- 30 Total net sales $11,847 $11,524 $ --- $11,524 OPERATING PROFITS Building products $ 691 $ 344 $ --- $ 344 Pulp and paper (8) 362 --- 362 Other operations 9 17 --- 17 Other income --- 344 344 --- Total operating profits 692 1,067 344 723 General corporate expense (166) (165) --- (165) Interest expense (565) (584) --- (584) Cost of accounts receivable sale program (35) (59) --- (59) Income (loss) before income taxes, extraordinary items and accounting changes (74) 259 344 (85) (Provision) benefit for income taxes 14 (293) (272) (21) Income (loss) before extraordinary items and accounting changes (60) (34) 72 (106) Extraordinary items, net of tax (9) (45) --- (45) Cumulative effect of accounting changes, net of taxes (55) (63) --- (63) Net income (loss) $ (124) $ (142)$ 72 $ (214) Per share: Income (loss) before extraordinary items and accounting changes $ (.69) $ (.40)$ .84 $ (1.24) Extraordinary items (.10) (.52) --- (.52) Cumulative effect of accounting changes (.64) (.73) --- (.73) Net income (loss) $ (1.43) $ (1.65)$ .84 $ (2.49) Average number of shares outstanding 86.4 85.8 85.8 85.8 Notes to Operating Highlights 1. Income (Loss) Per Share. Income (loss) per share is computed based on net income (loss) and the weighted average number of common shares outstanding, net of restricted stock. The effects of assuming issuance of common shares under long-term incentive, stock option and stock purchase plans were insignificant. 2. Accounting Changes. The Corporation adopted Financial Accounting
Standard Number 109 (FAS 109), "Accounting for Income Taxes" effective January 1, 1992. Adoption of this standard resulted in a one-time, after-tax charge of $55 million (64 cents per share) to 1992 earnings. Pretax earnings for 1992 include an additional charge for depreciation and depletion of $69 million, which was more than offset by a reduction in income tax expense of approximately $83 million. Results for the first three quarters of 1992 will be restated to reflect this change in accounting.
Effective Jan. 1, 1991, the Corporation adopted Financial Accounting Standard Number 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Also effective on that date, the Corporation changed its accounting policy to include in inventory certain supplies that previously were expensed. 3. Other Income. In July 1992, the Corporation received $22 million less working capital settlements of approximately $12 million related to the December 1991 sale of two groundwood paper mills, a sawmill and associated hydro-electric assets and timberlands. A pretax gain of $52 million ($15 million after taxes) was recognized on this transaction in 1991. In June 1991, the Corporation sold 49,000 acres of fee timberland in Washington for $48 million in cash. A pretax gain of $46 million ($29 million after taxes) was recognized on this transaction. In January 1991, the Corporation sold two domestic containerboard mills, 19 corrugated packaging plants and approximately 540,000 acres of fee timberland (and lease rights to 98,000 acres of timberland) for $725 million in cash and, in a separate transaction, sold its interests in a foreign containerboard mill, two corrugated packaging plants and two sheet plants for $102 million in cash. A combined pretax gain of $246 million ($28 million after taxes) was recorded.
4. Provision for Income Taxes. The income tax benefit for the three months ended Dec. 31, 1992, was based on a 19 percent effective tax rate on the pretax loss for the year as calculated under the provisions of FAS 109. The effective tax rate differs from the annual federal statutory tax rate primarily because of nondeductible goodwill amortization expense associated with past business acquisitions. The large tax benefit for the quarter is due to pretax results for the year being lower than was anticipated when calculating the provision for the first three quarters of the year.
The Corporation reported a pretax loss before extraordinary items and accounting changes of $74 million and an income tax benefit of $14 million for the 12 months ended Dec. 31, 1992. The pretax loss on which tax expense was computed for the 12-month period in 1992, excluding the cumulative effect of accounting changes, was approximately $51 million. This amount differs from the 1992 year-to-date reported pretax loss by $37 million primarily because of non-deductible goodwill amortization expense associated with past business acquisitions. 5. Extraordinary Items. During the 1992 fourth quarter, the
Corporation prepaid approximately $207 million in principal of its outstanding debt. The Corporation has reflected an extraordinary loss of $14 million ($9 million after taxes) related primarily to premiums paid to retire debt.
During the 1991 fourth quarter, the Corporation prepaid the outstanding portion of its unsecured term loan with proceeds from asset sales, debt offerings and short-term borrowings and refinanced its existing revolving credit facility, resulting in the accelerated write- off of approximately $72 million ($45 million after taxes) of capitalized debt issue costs. This loss on early extinguishment is reflected as an extraordinary item. -0- 1/21/93 /CONTACT: Sheila Weidman of Georgia-Pacific, 404-521-4732/ (GP)
CO: Georgia-Pacific Corporation ST: Georgia IN: PAP SU: ERN
BN-RA -- AT015 -- 7668 01/21/93 17:28 EST
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|Date:||Jan 21, 1993|
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