-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kJui3c5ZBeI0zqgc/gYvkRGU10zStDCxtycO9sZo98t/ZvlO4igdWT0M1Y72G+hx w/B1cx4G5YpE8XaEsCGxLw== 0000950130-94-001625.txt : 19941116 0000950130-94-001625.hdr.sgml : 19941116 ACCESSION NUMBER: 0000950130-94-001625 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHAMPION INTERNATIONAL CORP CENTRAL INDEX KEY: 0000019150 STANDARD INDUSTRIAL CLASSIFICATION: 2621 IRS NUMBER: 131427390 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03053 FILM NUMBER: 94559825 BUSINESS ADDRESS: STREET 1: ONE CHAMPION PLAZA CITY: STAMFORD STATE: CT ZIP: 06921 BUSINESS PHONE: 2033587000 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES PLYWOOD CHAMPION PAPERS IN DATE OF NAME CHANGE: 19720821 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 ---------------------------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------------------- Commission File Number 1-3053 ---------------------------------- Champion International Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 13-1427390 - ------------------------------------- --------------------------------------- State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization One Champion Plaza, Stamford, Connecticut 06921 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) 203-358-7000 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 31, 1994 - ---------------------------- ------------------------------- Common stock, $.50 par value 93,283,202 PART I. FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements. - ------------------------------ CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited) (in thousands, except per share)
Nine Months Ended Three Months Ended ----------------------- ----------------------- September 30, September 30, ---------- ---------- ---------- ---------- 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Net Sales $3,852,818 $3,768,606 $1,384,740 $1,245,331 Cost of products sold 3,527,095 3,503,675 1,222,911 1,176,639 Selling, general and administrative expenses 223,719 217,735 80,806 66,803 ---------- ---------- ---------- ---------- Income From Operations 102,004 47,196 81,023 1,889 Interest and debt expense 175,601 162,472 60,173 54,596 Other (income) expense - net (19,392) 17,552 (11,004) (3,888) ---------- ---------- ---------- ---------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (54,205) (132,828) 31,854 (48,819) Income Taxes (Benefit) (Note 2) (15,238) (28,938) 8,737 4,665 ---------- ---------- ---------- ---------- Income (Loss) Before Cumulative Effect of Accounting Change (38,967) (103,890) 23,117 (53,484) Cumulative Effect of Accounting Change, Net of Taxes (Note 3) --- (7,523) --- --- ---------- ---------- ---------- ---------- Net Income (Loss) $ (38,967) $ (111,413) $ 23,117 $ (53,484) ========== ========== ========== ========== Dividends on Preference Stock 20,813 20,813 6,938 6,938 ========== ========== ========== ========== Net Income (Loss) Applicable to Common Stock $ (59,780) $ (132,226) $ 16,179 $ (60,422) ========== ========== ========== ========== Average Number of Common Shares Outstanding 92,990 92,765 93,046 92,834 ========== ========== ========== ========== Earnings (Loss) Per Common Share (Exhibit 11): Income (Loss) Before Cumulative Effect of Accounting Change $ (.64) $ (1.34) $ .18 $ (.65) ========== ========== ========== ========== Cumulative Effect of Accounting Change $ --- $ (.08) $ --- $ --- ========== ========== ========== ========== Net Income (Loss) $ (.64) $ (1.42) $ .18 $ (.65) ========== ========== ========== ========== Cash dividends declared $ .15 $ .15 $ .05 $ .05 ========== ========== ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -2- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands of dollars)
September 30, December 31, 1994 1993 (unaudited) ------------- ------------ ASSETS: Current Assets: Cash and cash equivalents $ 84,285 $ 55,653 Short-term investments 6,677 7,197 Receivables - net 534,564 494,426 Inventories 431,885 469,269 Prepaid expenses 30,818 22,818 Deferred income taxes 63,717 65,064 ----------- ----------- Total Current Assets 1,151,946 1,114,427 ----------- ----------- Timber and timberlands, at cost - less cost of timber harvested 1,841,385 1,838,550 ----------- ----------- Property, plant and equipment, at cost 8,551,506 8,467,756 Less - Accumulated Depreciation (2,916,372) (2,665,720) ----------- ----------- 5,635,134 5,802,036 ----------- ----------- Other assets and deferred charges 354,856 387,756 ----------- ----------- Total Assets $ 8,983,321 $ 9,142,769 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY: Current Liabilities: Current installments of long-term debt $ 80,393 $ 88,052 Short-term bank borrowings 90,617 88,258 Accounts payable and accrued liabilities 582,664 591,153 Income taxes 21,894 4,841 ----------- ----------- Total Current Liabilities 775,568 772,304 ----------- ----------- Long-term debt 3,246,806 3,316,165 ----------- ----------- Other liabilities 684,784 672,788 ----------- ----------- Deferred income taxes 1,030,463 1,077,234 ----------- ----------- Minority interest in subsidiaries 63,210 54,160 ----------- ----------- Preference stock, $1.00 par value, $92.50 cumulative convertible series; 300,000 shares issued and outstanding (redeemable for $300,000) 300,000 300,000 ----------- ----------- Shareholders' Equity: Preference stock, no series, 8,231,431 shares authorized but unissued --- --- Capital Shares: Common (93,212,997 and 93,026,400 shares outstanding at September 30, 1994 and December 31, 1993, respectively) 48,353 48,184 Capital Surplus 1,172,833 1,163,555 Retained Earnings 1,787,804 1,861,535 ----------- ----------- 3,008,990 3,073,274 Treasury shares, at cost (100,308) (100,233) Cumulative translation adjustment (26,192) (22,923) ----------- ----------- Total Shareholders' Equity 2,882,490 2,950,118 ----------- ----------- Total Liabilities and Shareholders' Equity $ 8,983,321 $ 9,142,769 =========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -3- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED CASH FLOWS (unaudited) (in thousands of dollars)
Nine Months Ended ---------------------- September 30, ---------------------- 1994 1993 --------- --------- Cash flows from operating activities: Net Income (Loss) $ (38,967) $(111,413) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Cumulative effect of accounting change --- 7,523 Depreciation expense 279,969 267,315 Cost of timber harvested 56,895 58,606 (Increase)/decrease in receivables (40,948) (36,751) (Increase)/decrease in inventories 35,881 (42,237) (Increase)/decrease in prepaid expenses (8,129) (7,341) Increase/(decrease) in accounts payable and accrued liabilities (7,478) 3,093 Increase/(decrease) in income taxes 17,121 (3,780) Increase/(decrease) in other liabilities 8,079 (4,156) Increase/(decrease) in deferred income taxes (44,019) (37,515) All other - net 48,783 8,303 --------- --------- Net cash provided by operating activities 307,187 101,647 --------- --------- Cash flows from investing activities: Expenditures for property, plant and equipment (133,946) (387,940) Timber and timberlands expenditures (75,797) (84,814) Purchase of investments (28,859) (116,454) Proceeds from redemption of investments 30,216 94,100 Proceeds from sales of property, plant and equipment and timber and timberlands 32,387 14,084 All other - net (2,030) (15,370) --------- --------- Net cash (used in) investing activities (178,029) (496,394) --------- --------- Cash flows from financing activities: Proceeds from issuance of long-term debt 399,702 1,200,351 Payments of current installments of long-term debt and long-term debt (475,555) (778,624) Cash dividends paid (34,760) (34,747) All other - net 10,087 2,109 --------- --------- Net cash provided by (used in) financing activities (100,526) 389,089 --------- --------- Increase/(decrease) in cash and cash equivalents 28,632 (5,658) Cash and Cash Equivalents: Beginning of period 55,653 36,678 --------- --------- End of period $ 84,285 $ 31,020 ========= ========= Supplemental cash flow disclosures: Cash paid during the period for: Interest (net of capitalized amounts) $ 161,445 $ 141,283 Income taxes (net of refunds) (3,016) 7,235
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -4- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) September 30, 1994 Note 1. The unaudited information furnished in this report reflects all adjustments which are, in the opinion of management, necessary to present fairly a statement of the results for the interim periods reported. All such adjustments made were of a normal recurring nature. Note 2. Income Taxes (Benefit) for the three month and nine month periods ended September 30, 1993 includes a provision of $23 million to reflect a one-time adjustment to the company's deferred tax liability for changes in 1993 corporate income tax rates in the United States and Canada. Note 3. Cumulative Effect of Accounting Change for the nine month period ended September 30, 1993 reflects the after-tax effect of adopting, retroactive to January 1, 1993, a new accounting standard for postemployment benefits. -5- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and - ----------------------------------------------------------------------- Results of Operations. - ---------------------- Results of Operations - --------------------- Summary The company reported net income in the third quarter of 1994 of $23 million or 18 cents per share, compared to last year's third quarter loss of $53 million or 65 cents per share and last quarter's loss of $31 million or 41 cents per share. Excluding a non-recurring, tax-related charge discussed below, last year's third quarter loss was $30 million or 40 cents per share. Operating income of $81 million increased from $2 million a year ago and $4 million last quarter. Third quarter results reflected a significant improvement in the company's paper segment due primarily to substantial price increases for uncoated free sheet papers, pulp and newsprint, three of the company's major grades. These price increases were attributable in part to strengthening economies in the United States and in Europe. Operating income for the wood products segment also improved from last year and last quarter due mainly to higher prices for lumber and studs, particularly at the company's Canadian subsidiary, and increased Pacific region timber stumpage sales. General corporate expense was up from last year and last quarter primarily as the result of the impact of a higher stock price on the value of stock appreciation rights. Although long-term debt declined from last year and last quarter, interest and debt expense increased somewhat, principally reflecting higher interest rates and less capitalization of interest related to capital projects. Other (income) expense - net improved modestly from a year ago and last quarter due in part to currency translation gains recorded by the company's Brazilian subsidiary, Champion Papel e Celulose Ltda., as the result of reduced inflation in Brazil. The income tax provision for the third quarter of 1994 was favorable compared to last year. In last year's third quarter, the company recorded a non-recurring, non-cash charge of $23 million or 25 cents per share, to reflect the impact on the company's deferred tax liability of changes in corporate income tax rates in the United States and Canada. For the first nine months, the company reported a loss of $39 million or 64 cents per share, compared to a year-ago loss, excluding the non-recurring charge discussed above and the cumulative effect of an accounting change, of $81 million or $1.09 per share. Paper Segment The third quarter income from operations in the company's paper segment was $36 million, compared to losses of $22 million a year ago and $38 million last quarter. Break-even results for the domestic printing and writing papers business represented a substantial improvement from the operating losses of a year ago and last quarter. Shipments of coated and uncoated free sheet papers increased compared to last year and last quarter. Prices for uncoated free sheet grades were lower than last year. However, prices were higher than last quarter due to increases implemented late in the second quarter and during the third quarter. Additional price increases have been announced for -6- various uncoated grades effective in the fourth quarter. Prices for coated free sheet grades were down from last year and last quarter. Price increases for coated free sheet papers were implemented during the third quarter, the effect of which largely will not be reflected in results until the fourth quarter. Maintenance outages have been scheduled at three of the four domestic printing and writing papers mills in the fourth quarter. Net income at the Brazilian subsidiary improved from last year and last quarter as the result of higher domestic and export prices and slightly higher shipments. Operating income was up from last quarter but down from last year. The operating income decline from last year was due to the impact of lower inflation on recorded sales prices and was approximately offset by a favorable adjustment to the foreign currency translation gain included in other (income) expense - net, as discussed above. Export prices continued to strengthen early in the fourth quarter. Reflecting stronger overall results at the company's U.S. operations, approximately 27% of the company's consolidated operating income, before general corporate expense, in the first nine months of 1994, was attributable to the Brazilian subsidiary. The small operating loss for the publication papers business represented a decline from last year's operating profit and was approximately even with last quarter's operating loss. The decline from a year ago was due to lower prices for all paper grades and higher purchased pulp costs. Compared to last quarter, prices for all grades improved slightly, but this was offset by increased costs for purchased pulp. Overall, shipments were higher than last year and last quarter. Price increases for coated free sheet papers went into effect on September 22. Earnings for the company's U.S. and Canadian market pulp operations represented a significant improvement from the operating loss of a year ago and the small operating profit last quarter. Results reflected the impact of price increases in the second quarter and further price increases that went into effect August 1. An additional price increase was implemented on October 1. Maintenance outages are scheduled for all of the market pulp mills in the fourth quarter. The operating loss for the newsprint business was a significant improvement from the larger losses of a year ago and last quarter due primarily to higher prices. Shipments declined slightly from last year but increased from last quarter. The company has announced an additional discount reduction effective December 1. Maintenance outages are scheduled at both of the newsprint mills in the fourth quarter. Earnings for the packaging business were up from a year ago and last quarter due primarily to higher prices for kraft paper and linerboard. The company implemented a price increase for certain grades of linerboard and for kraft paper on October 1. Wood Products Segment The company's wood products segment, which includes the wood-related operations of the Canadian subsidiary, Weldwood of Canada Limited, reported third quarter income from operations of $61 million, up from $32 million a year ago and $56 million last quarter. Higher prices for lumber and studs, particularly at Weldwood, and significantly higher timber stumpage sales in the Pacific region primarily were responsible for the increase in earnings. Results for Weldwood's wood-related operations were adversely affected by increased stumpage costs for wood cut on government-owned timberlands in British Columbia. Lumber and plywood shipments were down from last year due to the fourth quarter 1993 sale of the company's Montana lumber and plywood operations. Compared to last quarter, plywood shipments increased and lumber shipments declined slightly. Timber stumpage sales for the Pacific region are expected to decline in the fourth quarter. The lumber mill at Klickitat, Washington, which was closed for an indefinite period effective August 1, 1994, was permanently closed on November 6, 1994. The annual capacity of that facility was 85 million board feet. -7- Labor Contracts New three year contracts are now in effect at Weldwood's British Columbia coastal wood products operations. Efforts to reach new agreements continue at the other Weldwood facilities where labor contracts have run past their expiration dates: the Hinton, Alberta pulp mill and timberlands operation, the joint venture pulp mill at Quesnel, British Columbia, and six of Weldwood's wood products plants. Each of these facilities presently is operating under the terms of its respective expired contract. Strike authorizations were adopted in August 1994 at five of the six affected wood products locations. The impact on Weldwood and the company of a strike, if any, would depend on which facilities were affected and the duration of any such strike. Financial Condition - ------------------- General The company's current ratio was 1.5 to 1 at September 30, 1994 and at June 30, 1994, as compared to 1.4 to 1 at year-end 1993. Total debt to total capitalization was 44% at September 30, 1994, as compared to 46% at June 30, 1994 and 44% at year-end 1993. Reflecting improved results and reduced capital spending, in the first nine months of 1994, the company's net cash provided by operating activities exceeded the requirements of its investing activities (principally capital expenditures). The approximate excess was used to pay dividends as well as a portion of the company's long-term debt and to increase cash and cash equivalents. Since year- end 1993, long-term debt has declined by $69 million, and cash and cash equivalents have increased by $29 million. Since June 30, 1994, long-term debt has declined by $109 million, and cash and cash equivalents have remained the same. In the first nine months of 1993, the company's net cash provided by operating activities was not sufficient to meet the requirements of its investing activities (principally capital expenditures) and its financing activities (principally debt payments and cash dividends). The difference was financed through borrowings and the use of cash and cash equivalents. Net borrowings generated cash proceeds of $422 million, and cash and cash equivalents decreased by $6 million, in the first nine months of 1993. Operating Activities For the first nine months, net cash provided by operating activities of $307 million increased from $102 million a year ago. The increase was due primarily to a lower net loss, changes in certain components of working capital, including a decrease in inventories, and lower deferrals of start-up costs associated with major capital projects. Investing Activities Net cash used in investing activities of $178 million declined from $496 million a year ago, due principally to substantially lower capital expenditures. With the completion of the company's extensive capital improvement program in 1993, the company has reduced capital spending to levels required for routine capital replacements, environmental compliance and incremental improvements. On November 7, 1994, Weldwood announced that it has agreed to sell its two coastal British Columbia sawmills and related timber-cutting rights to International Forest Products Limited for (Cdn) $140 million plus an additional amount for inventories. The sale, which is subject to provincial government and other regulatory approvals, is expected to close early in 1995. The two sawmills have a combined annual capacity of 185 million board feet of lumber. The agreement does not include approximately 30,000 acres of Weldwood's fee-owned timberlands in coastal British Columbia, which it also is seeking to sell. -8- Financing Activities Net cash used in financing activities of $101 million compared with net cash provided by financing activities of $389 million a year ago. Reflecting the improved results and lower capital expenditures discussed above, long-term debt was reduced by $69 million in the first nine months of 1994. At September 30, 1994, the company had $421 million of U.S. commercial paper and other short-term obligations outstanding, all of which are classified as long- term debt, down from $606 million at June 30, 1994 and $559 million at year-end 1993. In addition, at September 30, 1994, the company had $165 million of notes outstanding under its U.S. bank lines of credit, up from $145 million at June 30, 1994 and down from $224 million at year-end 1993. Domestically, at September 30, 1994, $421 million of the company's unused bank lines of credit of $850 million support the classification of commercial paper and other short-term obligations as long-term debt. On August 31, 1994, the company borrowed $88 million through the issuance of long-term tax-exempt bonds. The net proceeds are being applied to the payment of a portion of the costs of the construction of pollution control and solid waste disposal facilities at the company's Pensacola, Florida mill. The annual principal payment requirements under the terms of all long-term agreements for the period from October 1 through December 31, 1994 are $36 million and for the years 1995 through 1998 are $259 million, $689 million, $242 million and $393 million, respectively. Environmental Legal Proceedings There is incorporated by reference herein the information under Item 1. Legal ------------- Proceedings in Part II of this report. - ----------- -9- PART II. OTHER INFORMATION CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Item 1. Legal Proceedings. - --------------------------- As most recently reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, on January 4, 1991, a class action was brought against the company in state court in Tennessee. The class consisted of all Tennessee residents who own or lease land around Douglas Lake or along the Pigeon River. Subsequently, the case was transferred to the United States District Court for the Eastern District of Tennessee. While the original complaint sought $5 billion in compensatory and punitive damages, immediately prior to trial the plaintiffs reduced their demand to $367.9 million. The plaintiffs originally claimed damages for both personal injury and property damage, but the personal injury claims were dismissed. The case proceeded to trial on plaintiffs' theory that discharges of hazardous materials, including dioxin, from the company's Canton, North Carolina mill had decreased property values along the river and the lake. The trial began on September 14, 1992 and ended in a mistrial on October 16, 1992, when the jury was unable to reach a unanimous verdict. On May 3, 1993, the court approved a settlement of the action providing for a payment of $6.5 million by the company. On June 1, 1993, the court's approval of the settlement was appealed, and on September 20, 1994 the appeal was dismissed by the United States Court of Appeals for the Sixth Circuit. On October 3, 1994, a motion for rehearing was filed. As most recently reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, three separate actions were filed against the company and many other corporations, municipalities and individuals in the District Court of Galveston County, Texas by numerous individuals on March 8, 1993, April 20, 1993 and May 13, 1993, respectively. Each of these actions seeks compensatory and punitive damages in excess of $5 billion for personal injury and property damage allegedly resulting from the purported disposal of waste materials, including hazardous substances, into the McGinnis Waste Disposal Site located at Hall's Bayou Ranch. In August 1994, the claims of most of the plaintiffs were settled for an immaterial amount. The company currently anticipates that the remaining claims either will be settled for an immaterial amount or will be dismissed. Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ (a) See exhibit index following the signature page. (b) The company filed a Current Report on Form 8-K dated October 13, 1994 reporting the issuance of a press release announcing certain unaudited consolidated financial results of the company for the three months and nine months ended September 30, 1994, with the consolidated statement of income for the three months and nine months ended September 30, 1994 and September 30, 1993 and consolidated balance sheet as of September 30, 1994 and December 31, 1993 as exhibits thereto. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the undersigned on behalf of the registrant as duly authorized officers thereof and in their capacities as the chief accounting officers of the registrant. Champion International Corporation ---------------------------------- (Registrant) Date: November 8, 1994 John M. Nimons - ------------------------------ ---------------------------------- (Signature) John M. Nimons Vice President and Controller Date: November 8, 1994 Kenwood C. Nichols - ------------------------------ ---------------------------------- (Signature) Kenwood C. Nichols Vice Chairman -11- EXHIBIT INDEX Each exhibit is listed according to the number assigned to it in the Exhibit Table of Item 601 of Regulation S-K. 10.1 - Resolutions of the Board of Directors of the company adopted on August 18, 1994 relating to the compensation of directors. 10.2 - Champion International Corporation Nonqualified Supplemental Savings Plan. 11 - Calculation of Primary Earnings Per Common Share and Fully Diluted Earnings Per Common Share (unaudited). 27 - Financial Data Schedule (unaudited). -12- EX-10.1 2 RESOLUTIONS/BOARD OF DIRECTORS EXHIBIT 10.1 Resolutions of the Board of Directors of the Company adopted on August 18, 1994 relating to the compensation of directors --------------------------------------------------------------- RESOLVED, That, effective as of the current quarter, the fees credited or paid, as the case may be, to each Director who is not concurrently receiving compensation for services being rendered to the Company or any of its subsidiaries as an officer, employee or consultant, or in any capacity other than that of a Director, shall be a $30,000 annual retainer for serving as a Director, $1,500 for attendance at any meeting of this Board of Directors, a $5,000 annual retainer for serving as Chairman of any Committee of this Board of Directors and $1,000 for attendance at any meeting of any Committee of this Board of Directors; and FURTHER RESOLVED, That the first full resolution appearing at page 2102 of the minutes, as adopted by this Board of Directors on September 19, 1991, is rescinded and shall have no further force and effect; and FURTHER RESOLVED, That, except as modified by the immediately preceding resolution, the resolutions adopted by this Board of Directors regarding the compensation of outside Directors on September 19, 1991 (and appearing at pages 2099 to 2102 of the minutes) shall remain in full force and effect. EX-10.2 3 NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN EXHIBIT 10.2 CHAMPION INTERNATIONAL CORPORATION ---------------------------------- NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN -------------------------------------- INTRODUCTION ------------ Champion International Corporation hereby adopts the Champion International Corporation Nonqualified Supplemental Savings Plan, effective as of August 1, 1994. This Plan is an unfunded deferred compensation arrangement maintained by Champion International Corporation for the purpose of providing supplemental retirement savings primarily for a select group of management or highly compensated employees. ARTICLE I - DEFINITIONS ----------------------- 1.1 "Beneficiary" means the person or persons entitled to receive the ------------- distributions, if any, payable under the Plan upon or after a Participant's death. Each Participant may designate a Beneficiary by filing the proper form with the Committee. A Participant may designate one or more contingent Beneficiaries to receive any distributions after the death of a prior Beneficiary. A designation shall be effective upon said filing, provided that it is so filed during such Participant's lifetime, and may be changed from time to time by the Participant. 1.2 "Code" means the Internal Revenue Code of 1986, as amended from time to ------ time, and regulations relating thereto. 1.3 "Code Section 401(a)(17) Limitation" means the applicable compensation ------------------------------------ limitation set forth in section 401(a)(17) of the Code (as adjusted as provided therein) (or any corresponding successor provision). 1.4 "Committee" means the Champion International Corporation Pension and ----------- Employee Benefits Committee (or its delegate(s)) which is responsible for the administration of this Plan in accordance with the provisions of the Plan as set forth in this document. 1.5 "Company" means Champion International Corporation, a New York corporation, --------- or any successor thereto, including any successor to substantially all of its assets which adopts and assumes the Plan at the time of transfer. 1.6 "Compensation" means with respect to any Plan Year, the total of base pay, -------------- cash bonuses, foreign service premium, and temporary disability earnings paid to an Executive by an Employer or which would otherwise be so paid but for a deferral election under this Plan, the Savings Plan, and/or a plan subject to section 125 of the Code. "Compensation" shall also include any deferred bonuses under any management incentive bonus program(s), any "basic" 12 week interim pay under the Employer's "Special Termination Benefits" policies for employees, and any payments under the "Sustained Performance Incentive Program" if maintained by the Employer. 1.7 "Compensation Deferral Election" means the form described in Section 2.2 of -------------------------------- the Plan. 1.8 "Deferred Compensation Account" means the account to be established by the ------------------------------- Company as a book reserve to reflect the amounts deferred by a Participant and the matching contributions by the Employer under Article II, as adjusted by earnings (or losses) under Article III. 1.9 "Effective Date" means August 1, 1994. ---------------- 1.10 "Employer" means the Company, any affiliate which, with the authority of ---------- the Company, has adopted the Plan, and any successor or assignee of any of them. 1.11 "Excess Compensation" means that portion of an Executive's Compensation --------------------- which is in excess of the Code Section 401(a)(17) Limitation. 1.12 "Executive" means any employee of an Employer who is classified as Grade 20 ----------- to 34 by the Employer (except for any employee classified as Grade 31 or 33 but not administered as Grade 20 to 34) and whose Savings Plan Earnings in any Plan Year exceed the applicable Code Section 401(a)(17) Limitation, and any other employees designated by the Committee as members of the select group of management or highly compensated employees eligible for participation in the Plan. 1.13 "Participant" means any Executive who elects to participate in the Plan in ------------- accordance with Article II or a person who was such at the time of his death or termination of service and who retains, or whose Beneficiary retains, a benefit under the Plan which has not been distributed. 1.14 "Plan" means the Champion International Corporation Nonqualified ------ ----------------------------------------------- Supplemental Savings Plan as set forth in this instrument, effective as of ------------------------- August 1, 1994, and, as may be amended thereafter. 1.15 "Plan Year" means the calendar year, except that the first Plan Year is the ----------- period beginning August 1, 1994 and ending December 31, 1994. 1.16 "Savings Plan" means the Champion International Corporation Savings Plan -------------- ----------------------------------------------- #077 as in effect on the Effective Date and as subsequently amended, and ---- any successor or replacement plan for such plan. 1.17 "Savings Plan Earnings" means "Earnings" as defined in the Savings Plan ----------------------- without giving effect to the $200,000 limitation expressed therein and without otherwise giving effect to the Code Section 401(a)(17) Limitation. ARTICLE II - DEFERRAL ELECTIONS AND ----------------------------------- EMPLOYER MATCHING CONTRIBUTIONS ------------------------------- 2.1 General. Each Executive may elect to defer a part of his Excess -------- Compensation for each Plan Year in accordance with this Article II and thereby become a Participant under the Plan. 2.2 Compensation Deferral Election. A Participant desiring to exercise an ------------------------------- election under Section 2.1 shall file with the Employer a Compensation Deferral Election in such form as the Committee may prescribe. Such election shall be irrevocable, provided however, in the event a Participant is faced with an unforeseeable emergency (as defined in Section 4.3) during the Plan Year, such Participant, with the approval of the Committee, may revoke his election for the remainder of such Plan Year. A Compensation Deferral Election shall be authorization to the Employer to defer a percentage of the Participant's Excess Compensation and shall provide that his Excess Compensation be reduced -2- by a whole percentage of not less than one percent (1%) nor more than eight percent (8%), as determined by the Participant. Notwithstanding the foregoing, an Executive's Compensation Deferral Elections for the short 1994 Plan Year and/or for any of the Plan Years 1995 through 1997 may specify deferral amounts in excess of 8% of his Excess Compensation for said Plan Years so that such Executives who are elected officers on the Effective Date may defer during said Plan Years amounts that they could have deferred if the Plan had been in effect for calendar years 1989 through 1993 and the entire year of 1994 (whether or not they were elected officers during any or all calendar years 1989 through 1993 or the portion of 1994 prior to the Effective Date), or so that such Executives who are not elected officers on the Effective Date may defer during said Plan Years amounts that they could have deferred if the Plan had been in effect for the 1993 calendar year and the entire year of 1994. 2.3 Time of Election. A Participant's Compensation Deferral Election must be ----------------- delivered to the Employer prior to the beginning of each Plan Year by such date as the Committee shall specify. Notwithstanding the foregoing, for the short 1994 Plan Year only, a Participant may deliver his Compensation Deferral Election to the Employer within the 30-day period following the Effective Date, to be effective only with respect to Compensation earned in 1994 but after the date such Compensation Deferral Election is delivered to the Employer. With respect to an employee of an Employer who becomes an Executive during a Plan Year and who wishes to make a deferral election under this Article II for such Plan Year, he must deliver his Compensation Deferral Election to the Employer within the 30-day period following the day he becomes an Executive but only with respect to Compensation earned after the date such Compensation Deferral Election is delivered to the Employer. 2.4 Commencement of Deferrals. A Compensation Deferral Election shall be -------------------------- effective for the entire Plan Year to which it relates (the short 1994 Plan Year for the initial Plan Year) but only with respect to Compensation of the Participant earned for services rendered after the election is made in accordance with Sections 2.2 and 2.3. Compensation deferrals pursuant to such election shall not commence until the pay period following the pay period in which the Participant's aggregate Compensation paid to date for such Plan Year actually exceeds the Code Section 401(a)(17) Limitation then in effect. 2.5 Crediting of Accounts. Excess Compensation otherwise payable to the ---------------------- Participant during the Plan Year but deferred in accordance with Section 2.2 shall be credited to the Participant's Deferred Compensation Account as soon as administratively feasible after his Compensation is so reduced. 2.6 Matching Contributions. Each Employer shall credit matching contributions ----------------------- to the Deferred Compensation Account of each Participant who has a deferral election under Section 2.2 in effect for all or part of the Plan Year. The amount of such matching contributions shall be calculated by reference to the Participant's Compensation deferrals for the Plan Year and shall be equal to fifty percent (50%) of the amount of the first six percent (6%) of Excess Compensation deferred. Notwithstanding the foregoing, with respect to Executives who for the short 1994 Plan Year and/or any of the Plan Years 1995 through 1997 make deferral elections in excess of 8% as permitted under Section 2.2, matching contributions with respect to such excess deferrals shall be equal to fifty percent (50%) of the amount of the first six percent (6%) of aggregate Excess Compensation deferred for the years to which such excess deferrals relate as provided in the fourth sentence of Section 2.2. Matching contributions under this Section 2.6 shall be credited to Participants' Deferred Compensation Accounts on the same periodic basis as matching contributions are credited to participants' accounts under the Savings Plan. -3- ARTICLE III - CREDITING OF EARNINGS ----------------------------------- 3.1 General. Subject to Section 3.4, there shall be credited to Participants' -------- Deferred Compensation Accounts earnings (or losses) as if such Deferred Compensation Accounts were actually invested in the investment funds and Company Stock Fund available under the Savings Plan as determined under this Article III. 3.2 Investment of Participant Deferrals. With respect to that part of each ------------------------------------ Participant's Deferred Compensation Account attributable to his own elective deferrals under Section 2.2, each Participant shall elect to have earnings (or losses) credited to his Deferred Compensation Account from among the investment funds made available under the Savings Plan with respect to participant before-tax elective deferrals under said plan. Such an election shall be made in writing, on a form provided by the Committee, and delivered to the Employer prior to the beginning of each Plan Year by such date as the Committee shall determine. An investment election shall be effective for the entire Plan Year to which it relates unless modified by the Participant during the Plan Year. Such modifications may be made periodically on the same basis as participant investment elections under the Savings Plan may be modified. If a Participant fails to make and deliver an election for the following Plan Year by the date as determined by the Committee, then his Deferred Compensation Account shall be credited with the earnings (losses) under the investment election most recently in effect. 3.3 Investment of Employer Matching Contributions. With respect to that part of ---------------------------------------------- each Participant's Deferred Compensation Account attributable to Employer matching contributions under Section 2.6, the Company shall credit each Participant's Deferred Compensation Account with earnings (or losses) as if such matching contributions were invested in the "Company Stock Fund" under the Savings Plan. 3.4 Crediting of Earnings. The rates of return throughout each Plan Year for ---------------------- the investment funds and Company Stock Fund referenced under Sections 3.2 and 3.3 shall be the same as the actual rates of return for said funds as under the Savings Plan. For each Plan Year, each Participant's Deferred Compensation Account shall be increased or decreased as if it had earned such rates of return. Such increase or decrease shall be based on the varying balances of the Deferred Compensation Accounts throughout the Plan Year and shall be credited to said accounts on the same periodic basis as investment earnings (losses) are credited to participants' accounts under the Savings Plan. ARTICLE IV - PLAN BENEFITS -------------------------- 4.1 Vesting. Subject to Section 8.1, a Participant's rights to that part of his -------- Deferred Compensation Account attributable to his own elective deferrals under Section 2.2, as adjusted for earnings (or losses) under Article III, shall be nonforfeitable at all times. A Participant's rights to that part of his Deferred Compensation Account attributable to the crediting of Employer matching contributions under Section 2.6, as adjusted for earnings (or losses) under Article III, shall become nonforfeitable on the same basis as Employer matching contributions under the Savings Plan. 4.2 Distributions. Subject to Section 4.3, the nonforfeitable amounts -------------- represented by a Participant's Deferred Compensation Account shall become distributable upon the Participant's separation from service with all Employers due to his retirement, death, disability (in accordance with the definition of "Disability" under the Savings Plan), or other termination of employment. At the time a Participant makes his yearly deferral election under Article II of the Plan, he also shall elect -4- whether the nonforfeitable amounts represented by his Deferred Compensation Account shall commence to be paid to him as soon as administratively feasible upon his separation from service with all Employers or as of a later date specified by the Participant. Such an election also shall specify whether such amounts shall be paid in a single sum cash distribution, or in up to ten (10) annual cash installments (as well as the amounts of such installments) payable to the Participant while living with any remaining nonforfeitable amount in his Deferred Compensation Account payable after his death to his Beneficiary in a single sum in accordance with Article V. 4.3 Withdrawal for Unforeseeable Emergency. Notwithstanding the provisions of --------------------------------------- Section 4.2 to the contrary, in the event that a Participant is faced with an unforeseeable emergency (as defined below), the Participant may request a withdrawal from the nonforfeitable portion of his Deferred Compensation Account in an amount sufficient to meet such emergency. Any such withdrawal shall be paid in a single sum distribution. For purposes of this Section 4.3, an unforseeable emergency is a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The Committee shall determine whether the circumstances presented by the Participant constitute an unforeseeable emergency. Such circumstances and the Committee's determination will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved: (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (c) by cessation of his elective deferrals under this Plan. 4.4 Commencement of Payment. At the time for payment designated by the ------------------------ Participant in accordance with Section 4.2, the nonforfeitable amounts represented by the Participant's Deferred Compensation Account, increased by any nonforfeitable amounts due to be credited but not yet credited under Sections 2.5 and 2.6, and decreased by any withdrawals under Section 4.3, shall commence to be paid in a single sum distribution or in installments as elected by the Participant in accordance with Section 4.2. If installment payments are elected, the first annual installment shall be payable as of the commencement date elected by the Participant under Section 4.2 and the remaining installments shall be payable on the annual anniversary of that commencement date. The installment payments shall be in such amounts as elected by the Participant on his most recent yearly election form completed prior to his separation from service or other termination of employment. If a Participant's Deferred Compensation Account is paid in installments, such account shall continue to be credited with earnings (or losses) under Article III until payment of the final installment. ARTICLE V - DEATH BENEFIT ------------------------- 5.1 Terms. Upon the death of a Participant, any unpaid nonforfeitable amounts ------ represented by the Participant's Deferred Compensation Account, increased by any amounts due to be credited but not yet credited under Sections 2.5 and 2.6, shall be payable to the Participant's Beneficiary in a single sum distribution as soon as administratively feasible after the Participant's death. -5- ARTICLE VI - ADMINISTRATION OF PLAN ----------------------------------- 6.1 General Administration. The Committee shall be responsible for the general ----------------------- administration of the Plan and for carrying out its provisions. The Committee shall have full power and authority to interpret, construe and administer the Plan. 6.2 General Powers. All provisions set forth in the Savings Plan with respect --------------- to the administrative powers and duties of the Committee and the procedures for filing claims shall also be applicable with respect to the Plan. The Committee shall be entitled to rely conclusively upon all calculations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Committee with respect to the Plan. ARTICLE VII - AMENDMENT OR TERMINATION -------------------------------------- 7.1 Amendment or Termination. The Plan may be amended in whole or in part from ------------------------- time to time, or terminated, by action of the Committee. Such termination and any such amendment shall be binding on each Employer, Executive and Beneficiary. Notice of such termination or amendment shall be given in writing to each Employer, Participant and Beneficiary of a deceased Participant. 7.2 Effect of Amendment or Termination. No amendment or termination of the Plan ----------------------------------- shall directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of any benefit under this Plan, payment of which has not been made prior to the effective date of such amendment or termination. ARTICLE VIII - GENERAL PROVISIONS --------------------------------- 8.1 No Funding or Interest in Assets. The Plan shall at all times be entirely --------------------------------- unfunded and no provision shall at any time be made with respect to segregating any assets of an Employer for payment of any benefits hereunder. No Participant or his designated Beneficiary shall acquire any property interest in his Deferred Compensation Account or any other assets of the Employer, their rights being limited to receiving from the Employer deferred payments as set forth in this Plan and these rights are conditioned upon continued compliance with the terms and conditions of this Plan. To the extent that any Participant or Beneficiary acquires a right to receive benefits under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Employer. 8.2 Assignment or Alienation. Except as required by law, no right of a ------------------------- Participant or designated Beneficiary to receive payments under this Plan shall be subject to transfer, anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law and any attempt, voluntary or involuntary, to effect any such action shall be null and void and of no effect. 8.3 General Conditions. Any retirement benefit or any other benefit payable ------------------- under the Savings Plan shall be paid solely in accordance with the terms and conditions of the Savings Plan and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Savings Plan. -6- 8.4 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a ------------------------ guaranty by any person that the assets of an Employer will be sufficient to pay any benefit hereunder. 8.5 No Enlargement of Rights. No Participant or Beneficiary shall have any ------------------------- right to a benefit under the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of an Employer. 8.6 Construction. This Plan shall be construed under the laws of the State of ------------- Connecticut. Article headings are for convenience only and shall not be considered as part of the terms and provisions of the Plan. Words in the masculine gender shall include the feminine, and the singular shall include the plural, and vice versa, unless qualified by the context. 8.7 Withholding of Taxes. The Company shall withhold from any amounts payable --------------------- under the Plan, all federal, state, and local taxes that the Company determines is legally required. 8.8 Binding on Successors, Purchasers, Transferees and Assignees. The Plan ------------------------------------------------------------- shall be binding upon any successor or successors of the Company and of any other Employer whether by merger, consolidation, or otherwise. In the event of the sale or transfer of substantially all of the assets of the Company or of any other Employer to any successor, purchaser, transferee or assignee, the Company and such other Employer each agrees that as a condition of such sale or transfer, the successor, purchaser, transferee or assignee shall adopt and assume the Plan at the time of the sale, transfer or assignment including, without limitation, all obligations which have accrued or may accrue in the future, and shall be bound by all the terms and provisions of the Plan, and the Company and such other Employer shall remain fully liable under the Plan. If the Company or any other Employer assigns or otherwise transfers or attempts to delegate its duties or responsibilities pursuant to the Plan to any party, the Company and such other Employer each agrees that it shall remain obligated hereunder in addition to the obligation hereunder of such party. If a merger, consolidation, sale, or transfer is made as provided in this Section, the provisions of this Section shall continue in full force and effect, and thereafter for all purposes of this Section and the application thereof, the immediate successor, purchaser, transferee or assignee and all subsequent successors, purchasers, transferees and assignees shall be deemed to be and shall be considered as the Company or as any other Employer hereunder, as the case may be. No other such merger, consolidation, sale, or transfer shall be made except in compliance with the provisions of this Section. IN WITNESS THEREOF, Champion International Corporation has caused this Plan to be executed this __ day of _________, 1994. CHAMPION INTERNATIONAL CORPORATION By: ____________________________________ ATTEST: ____________________________________ -7- EX-11 4 CALCULATION OF EARNINGS EXHIBIT 11 CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Calculation of Primary Earnings (Loss) Per Common Share and Fully Diluted Earnings (Loss) Per Common Share (unaudited) (in thousands, except per share)
Nine Months Ended Three Months Ended --------------------- -------------------- September 30, September 30, --------------------- -------------------- 1994 1993 1994 1993 --------- --------- --------- --------- Primary earnings (loss) per common share: Net Income (Loss) $ (38,967) $(111,413) $ 23,117 $ (53,484) Dividends on Preference Shares 20,813 20,813 6,938 6,938 --------- --------- --------- --------- Net Income (Loss) Applicable to Common Stock $ (59,780) $(132,226) $ 16,179 $ (60,422) ========= ========= ========= ========= Average number of common shares outstanding 92,990 92,765 93,046 92,834 ========= ========= ========= ========= Per share $ (.64) $ (1.42) $ .18 $ (.65) ========= ========= ========= ========= Fully diluted earnings (loss) per common share: Net Income (Loss) Applicable to Common Stock $ (59,780) $(132,226) $ 16,179 $ (60,422) Add income effect, assuming conversion of dilutive convertible securities --- --- --- --- --------- --------- --------- --------- Net income (loss) on a fully diluted basis $ (59,780) $(132,226) $ 16,179 $ (60,422) ========= ========= ========= ========= Average number of common shares outstanding 92,990 92,765 93,046 92,834 Add common share effect, assuming conversion of dilutive convertible securities --- --- --- --- --------- --------- --------- --------- Average number of common shares outstanding on a fully diluted basis 92,990 92,765 93,046 92,834 ========= ========= ========= ========= Per share $ (.64) $ (1.42) $ .18 $ (.65) ========= ========= ========= =========
NOTE: (1) The computation of fully diluted earnings per common share assumes that the average number of common shares outstanding during the period is increased by the conversion of securities having a dilutive effect, and that net income applicable to common stock is increased by dividends and after-tax interest on such securities. EX-27 5 ARTICLE 5 FDS
5 This schedule contains summary financial information extracted from the Consolidated Statement of Income for the nine months ended September 30, 1994, and the Consolidated Balance Sheet as of September 30, 1994, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1994 SEP-30-1994 84,285 6,677 546,748 12,184 431,885 1,176,314 10,392,891 (2,916,372) 8,983,321 775,568 3,246,806 48,353 300,000 0 2,834,137 8,983,321 3,852,818 3,852,818 3,527,095 3,527,095 0 0 175,601 (54,205) (15,238) (38,967) 0 0 0 (38,967) (0.64) (0.64) Includes timber and timberlands.
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